Correlation Between Beauty Community and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Beauty Community 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 Beauty Community and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beauty Community Public and Dow Jones Industrial, you can compare the effects of market volatilities on Beauty Community 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 Beauty Community with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beauty Community and Dow Jones.
Diversification Opportunities for Beauty Community and Dow Jones
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Beauty and Dow is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Beauty Community 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 Beauty Community 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 Beauty Community 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 Beauty Community i.e., Beauty Community and Dow Jones go up and down completely randomly.
Pair Corralation between Beauty Community and Dow Jones
Assuming the 90 days trading horizon Beauty Community Public is expected to generate 117.81 times more return on investment than Dow Jones. However, Beauty Community is 117.81 times more volatile than Dow Jones Industrial. It trades about 0.08 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.17 per unit of risk. If you would invest 56.00 in Beauty Community Public on August 28, 2024 and sell it today you would lose (17.00) from holding Beauty Community Public or give up 30.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 96.83% |
| Values | Daily Returns |
Beauty Community Public vs. Dow Jones Industrial
Performance |
| Timeline |
Beauty Community and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Beauty Community Public
Pair trading matchups for Beauty Community
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Beauty Community and Dow Jones
The main advantage of trading using opposite Beauty Community and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beauty Community 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.| Beauty Community vs. SCB X Public | Beauty Community vs. Kasikornbank Public | Beauty Community vs. PTT Public | Beauty Community vs. Kasikornbank Public |
| 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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