Correlation Between Belden and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Belden 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 Belden and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Belden Inc and Dow Jones Industrial, you can compare the effects of market volatilities on Belden 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 Belden with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Belden and Dow Jones.
Diversification Opportunities for Belden and Dow Jones
Almost no diversification
The 3 months correlation between Belden and Dow is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Belden Inc 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 Belden 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 Belden Inc 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 Belden i.e., Belden and Dow Jones go up and down completely randomly.
Pair Corralation between Belden and Dow Jones
Considering the 90-day investment horizon Belden Inc is expected to generate 3.08 times more return on investment than Dow Jones. However, Belden is 3.08 times more volatile than Dow Jones Industrial. It trades about 0.12 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.11 per unit of risk. If you would invest 7,406 in Belden Inc on August 28, 2024 and sell it today you would earn a total of 5,091 from holding Belden Inc or generate 68.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Belden Inc vs. Dow Jones Industrial
Performance |
| Timeline |
Belden and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Belden Inc
Pair trading matchups for Belden
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Belden and Dow Jones
The main advantage of trading using opposite Belden and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Belden 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.| Belden vs. Clearfield | Belden vs. Comtech Telecommunications Corp | Belden vs. Knowles Cor | Belden vs. Extreme Networks |
| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
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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