Correlation Between Aberforth Smaller and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Aberforth Smaller 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 Aberforth Smaller and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aberforth Smaller Companies and Dow Jones Industrial, you can compare the effects of market volatilities on Aberforth Smaller 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 Aberforth Smaller with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberforth Smaller and Dow Jones.
Diversification Opportunities for Aberforth Smaller and Dow Jones
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Aberforth and Dow is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Aberforth Smaller Companies 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 Aberforth Smaller 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 Aberforth Smaller Companies 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 Aberforth Smaller i.e., Aberforth Smaller and Dow Jones go up and down completely randomly.
Pair Corralation between Aberforth Smaller and Dow Jones
Assuming the 90 days trading horizon Aberforth Smaller is expected to generate 6.65 times less return on investment than Dow Jones. In addition to that, Aberforth Smaller is 1.38 times more volatile than Dow Jones Industrial. It trades about 0.01 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of volatility. If you would invest 3,392,601 in Dow Jones Industrial on October 25, 2024 and sell it today you would earn a total of 1,023,072 from holding Dow Jones Industrial or generate 30.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.4% |
| Values | Daily Returns |
Aberforth Smaller Companies vs. Dow Jones Industrial
Performance |
| Timeline |
Aberforth Smaller and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Aberforth Smaller Companies
Pair trading matchups for Aberforth Smaller
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Aberforth Smaller and Dow Jones
The main advantage of trading using opposite Aberforth Smaller and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberforth Smaller 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.| Aberforth Smaller vs. Atalaya Mining | Aberforth Smaller vs. Coeur Mining | Aberforth Smaller vs. Thor Mining PLC | Aberforth Smaller vs. Empire Metals Limited |
| Dow Jones vs. Xiabuxiabu Catering Management | Dow Jones vs. Neogen | Dow Jones vs. Orion Office Reit | Dow Jones vs. Bassett Furniture Industries |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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