Correlation Between Aviv Arlon and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Aviv Arlon 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 Aviv Arlon and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aviv Arlon and Dow Jones Industrial, you can compare the effects of market volatilities on Aviv Arlon 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 Aviv Arlon with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aviv Arlon and Dow Jones.
Diversification Opportunities for Aviv Arlon and Dow Jones
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aviv and Dow is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Aviv Arlon 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 Aviv Arlon 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 Aviv Arlon 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 Aviv Arlon i.e., Aviv Arlon and Dow Jones go up and down completely randomly.
Pair Corralation between Aviv Arlon and Dow Jones
Assuming the 90 days trading horizon Aviv Arlon is expected to generate 10.37 times more return on investment than Dow Jones. However, Aviv Arlon is 10.37 times more volatile than Dow Jones Industrial. It trades about 0.51 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.22 per unit of risk. If you would invest 73,800 in Aviv Arlon on August 27, 2024 and sell it today you would earn a total of 88,200 from holding Aviv Arlon or generate 119.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 80.95% |
| Values | Daily Returns |
Aviv Arlon vs. Dow Jones Industrial
Performance |
| Timeline |
Aviv Arlon and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Aviv Arlon
Pair trading matchups for Aviv Arlon
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Aviv Arlon and Dow Jones
The main advantage of trading using opposite Aviv Arlon and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aviv Arlon 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.| Aviv Arlon vs. Israel Canada | Aviv Arlon vs. Delek Group | Aviv Arlon vs. Shikun Binui | Aviv Arlon vs. Israel Discount Bank |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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