Correlation Between Beijing Capital and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Beijing Capital 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 Beijing Capital and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beijing Capital International and Dow Jones Industrial, you can compare the effects of market volatilities on Beijing Capital 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 Beijing Capital with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing Capital and Dow Jones.
Diversification Opportunities for Beijing Capital and Dow Jones
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Beijing and Dow is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Capital International 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 Beijing Capital 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 Beijing Capital International 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 Beijing Capital i.e., Beijing Capital and Dow Jones go up and down completely randomly.
Pair Corralation between Beijing Capital and Dow Jones
Assuming the 90 days horizon Beijing Capital International is expected to generate 11.79 times more return on investment than Dow Jones. However, Beijing Capital is 11.79 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 0.14 per unit of risk. If you would invest 31.00 in Beijing Capital International on August 25, 2024 and sell it today you would earn a total of 0.00 from holding Beijing Capital International or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beijing Capital International vs. Dow Jones Industrial
Performance |
| Timeline |
Beijing Capital and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Beijing Capital International
Pair trading matchups for Beijing Capital
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Beijing Capital and Dow Jones
The main advantage of trading using opposite Beijing Capital and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beijing Capital 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.| Beijing Capital vs. Grupo Aeroportuario del | Beijing Capital vs. Grupo Aeroportuario del | Beijing Capital vs. Grupo Aeroportuario del | Beijing Capital vs. AerSale Corp |
| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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