Correlation Between Badger Meter and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Badger Meter 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 Badger Meter and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Badger Meter and Dow Jones Industrial, you can compare the effects of market volatilities on Badger Meter 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 Badger Meter with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Badger Meter and Dow Jones.
Diversification Opportunities for Badger Meter and Dow Jones
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Badger and Dow is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Badger Meter 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 Badger Meter 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 Badger Meter 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 Badger Meter i.e., Badger Meter and Dow Jones go up and down completely randomly.
Pair Corralation between Badger Meter and Dow Jones
Considering the 90-day investment horizon Badger Meter is expected to generate 2.24 times more return on investment than Dow Jones. However, Badger Meter is 2.24 times more volatile than Dow Jones Industrial. It trades about 0.18 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.15 per unit of risk. If you would invest 20,267 in Badger Meter on August 24, 2024 and sell it today you would earn a total of 1,741 from holding Badger Meter or generate 8.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Badger Meter vs. Dow Jones Industrial
Performance |
| Timeline |
Badger Meter and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Badger Meter
Pair trading matchups for Badger Meter
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Badger Meter and Dow Jones
The main advantage of trading using opposite Badger Meter and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Badger Meter 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.| Badger Meter vs. ESCO Technologies | Badger Meter vs. Novanta | Badger Meter vs. Sensata Technologies Holding | Badger Meter vs. Fortive Corp |
| Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. Titan Machinery | Dow Jones vs. Simon Property Group |
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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