Correlation Between Joint Stock and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Joint Stock 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 Joint Stock and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Joint Stock Commercial and Dow Jones Industrial, you can compare the effects of market volatilities on Joint Stock 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 Joint Stock with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Joint Stock and Dow Jones.
Diversification Opportunities for Joint Stock and Dow Jones
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Joint and Dow is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Joint Stock Commercial 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 Joint Stock 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 Joint Stock Commercial 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 Joint Stock i.e., Joint Stock and Dow Jones go up and down completely randomly.
Pair Corralation between Joint Stock and Dow Jones
Assuming the 90 days trading horizon Joint Stock Commercial is expected to generate 1.62 times more return on investment than Dow Jones. However, Joint Stock is 1.62 times more volatile than Dow Jones Industrial. It trades about 0.06 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.19 per unit of risk. If you would invest 3,863,600 in Joint Stock Commercial on October 16, 2024 and sell it today you would earn a total of 66,400 from holding Joint Stock Commercial or generate 1.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Joint Stock Commercial vs. Dow Jones Industrial
Performance |
| Timeline |
Joint Stock and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Joint Stock Commercial
Pair trading matchups for Joint Stock
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Joint Stock and Dow Jones
The main advantage of trading using opposite Joint Stock and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Joint Stock 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.| Joint Stock vs. FIT INVEST JSC | Joint Stock vs. Damsan JSC | Joint Stock vs. An Phat Plastic | Joint Stock vs. APG Securities Joint |
| Dow Jones vs. Gfl Environmental Holdings | Dow Jones vs. Lizhan Environmental | Dow Jones vs. Grupo Simec SAB | Dow Jones vs. Constellation Brands Class |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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