Correlation Between BEC World and Dow Jones
Can any of the company-specific risk be diversified away by investing in both BEC World 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 BEC World and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BEC World Public and Dow Jones Industrial, you can compare the effects of market volatilities on BEC World 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 BEC World with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of BEC World and Dow Jones.
Diversification Opportunities for BEC World and Dow Jones
Average diversification
The 3 months correlation between BEC and Dow is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding BEC World 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 BEC World 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 BEC World 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 BEC World i.e., BEC World and Dow Jones go up and down completely randomly.
Pair Corralation between BEC World and Dow Jones
Assuming the 90 days trading horizon BEC World Public is expected to generate 66.14 times more return on investment than Dow Jones. However, BEC World is 66.14 times more volatile than Dow Jones Industrial. It trades about 0.04 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.09 per unit of risk. If you would invest 1,005 in BEC World Public on August 28, 2024 and sell it today you would lose (613.00) from holding BEC World Public or give up 61.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.06% |
| Values | Daily Returns |
BEC World Public vs. Dow Jones Industrial
Performance |
| Timeline |
BEC World and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
BEC World Public
Pair trading matchups for BEC World
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with BEC World and Dow Jones
The main advantage of trading using opposite BEC World and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BEC World 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.| BEC World vs. Indara Insurance Public | BEC World vs. Regional Container Lines | BEC World vs. Regional Container Lines | BEC World vs. Mahachai Hospital 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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