Correlation Between Blue Star and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Blue Star 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 Blue Star and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blue Star Gold and Dow Jones Industrial, you can compare the effects of market volatilities on Blue Star 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 Blue Star with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Star and Dow Jones.
Diversification Opportunities for Blue Star and Dow Jones
Significant diversification
The 3 months correlation between Blue and Dow is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Blue Star Gold 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 Blue Star 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 Blue Star Gold 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 Blue Star i.e., Blue Star and Dow Jones go up and down completely randomly.
Pair Corralation between Blue Star and Dow Jones
Assuming the 90 days horizon Blue Star Gold is expected to under-perform the Dow Jones. In addition to that, Blue Star is 7.45 times more volatile than Dow Jones Industrial. It trades about -0.08 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.15 per unit of volatility. If you would invest 3,870,327 in Dow Jones Industrial on November 3, 2024 and sell it today you would earn a total of 584,139 from holding Dow Jones Industrial or generate 15.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.43% |
| Values | Daily Returns |
Blue Star Gold vs. Dow Jones Industrial
Performance |
| Timeline |
Blue Star and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Blue Star Gold
Pair trading matchups for Blue Star
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Blue Star and Dow Jones
The main advantage of trading using opposite Blue Star and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blue Star 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.| Blue Star vs. Argo Gold | Blue Star vs. Minnova Corp | Blue Star vs. Angkor Resources Corp | Blue Star vs. Advance United Holdings |
| 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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