Correlation Between Autosports and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Autosports and Dow Jones at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Autosports and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autosports Group and Dow Jones Industrial, you can compare the effects of market volatilities on Autosports and Dow Jones and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Autosports with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autosports and Dow Jones.
Diversification Opportunities for Autosports and Dow Jones
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Autosports and Dow is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Autosports Group and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Autosports is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Autosports Group are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Autosports i.e., Autosports and Dow Jones go up and down completely randomly.
Pair Corralation between Autosports and Dow Jones
Assuming the 90 days trading horizon Autosports Group is expected to under-perform the Dow Jones. In addition to that, Autosports is 1.44 times more volatile than Dow Jones Industrial. It trades about -0.2 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.34 per unit of volatility. If you would invest 4,239,227 in Dow Jones Industrial on November 3, 2024 and sell it today you would earn a total of 215,239 from holding Dow Jones Industrial or generate 5.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Autosports Group vs. Dow Jones Industrial
Performance |
| Timeline |
Autosports and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Autosports Group
Pair trading matchups for Autosports
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Autosports and Dow Jones
The main advantage of trading using opposite Autosports and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autosports position performs unexpectedly, Dow Jones can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Dow Jones will offset losses from the drop in Dow Jones' long position.| Autosports vs. My Foodie Box | Autosports vs. Iron Road | Autosports vs. Beston Global Food | Autosports vs. Pearl Gull Iron |
| Dow Jones vs. Cincinnati Financial | Dow Jones vs. Kellanova | Dow Jones vs. Acme United | Dow Jones vs. Procter Gamble |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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