Correlation Between Black Box and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Black Box 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 Black Box and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Box Limited and Dow Jones Industrial, you can compare the effects of market volatilities on Black Box 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 Black Box with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Box and Dow Jones.
Diversification Opportunities for Black Box and Dow Jones
Modest diversification
The 3 months correlation between Black and Dow is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Black Box Limited 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 Black Box 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 Black Box Limited 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 Black Box i.e., Black Box and Dow Jones go up and down completely randomly.
Pair Corralation between Black Box and Dow Jones
Assuming the 90 days trading horizon Black Box Limited is expected to generate 4.28 times more return on investment than Dow Jones. However, Black Box is 4.28 times more volatile than Dow Jones Industrial. It trades about 0.15 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.1 per unit of risk. If you would invest 26,350 in Black Box Limited on August 27, 2024 and sell it today you would earn a total of 30,555 from holding Black Box Limited or generate 115.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.81% |
| Values | Daily Returns |
Black Box Limited vs. Dow Jones Industrial
Performance |
| Timeline |
Black Box and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Black Box Limited
Pair trading matchups for Black Box
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Black Box and Dow Jones
The main advantage of trading using opposite Black Box and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Box 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.| Black Box vs. Reliance Industries Limited | Black Box vs. Life Insurance | Black Box vs. Indian Oil | Black Box vs. Oil Natural Gas |
| Dow Jones vs. MI Homes | Dow Jones vs. Franklin Street Properties | Dow Jones vs. Summit Hotel Properties | Dow Jones vs. Portillos |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| CEOs Directory Screen CEOs from public companies around the world |