Correlation Between ATP 30 and Dow Jones
Can any of the company-specific risk be diversified away by investing in both ATP 30 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 ATP 30 and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATP 30 Public and Dow Jones Industrial, you can compare the effects of market volatilities on ATP 30 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 ATP 30 with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATP 30 and Dow Jones.
Diversification Opportunities for ATP 30 and Dow Jones
Weak diversification
The 3 months correlation between ATP and Dow is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding ATP 30 Public 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 ATP 30 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 ATP 30 Public 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 ATP 30 i.e., ATP 30 and Dow Jones go up and down completely randomly.
Pair Corralation between ATP 30 and Dow Jones
Assuming the 90 days trading horizon ATP 30 Public is expected to generate 63.5 times more return on investment than Dow Jones. However, ATP 30 is 63.5 times more volatile than Dow Jones Industrial. It trades about 0.04 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of risk. If you would invest 136.00 in ATP 30 Public on September 3, 2024 and sell it today you would lose (38.00) from holding ATP 30 Public or give up 27.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.58% |
| Values | Daily Returns |
ATP 30 Public vs. Dow Jones Industrial
Performance |
| Timeline |
ATP 30 and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
ATP 30 Public
Pair trading matchups for ATP 30
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with ATP 30 and Dow Jones
The main advantage of trading using opposite ATP 30 and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATP 30 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.| ATP 30 vs. Dynasty Ceramic Public | ATP 30 vs. Filter Vision Public | ATP 30 vs. East Coast Furnitech | ATP 30 vs. Asia Green Energy |
| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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