Correlation Between Black Oak and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Black Oak 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 Black Oak and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Oak Emerging and Dow Jones Industrial, you can compare the effects of market volatilities on Black Oak 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 Black Oak with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Oak and Dow Jones.
Diversification Opportunities for Black Oak and Dow Jones
Very poor diversification
The 3 months correlation between Black and Dow is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Black Oak Emerging 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 Black Oak 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 Black Oak Emerging 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 Black Oak i.e., Black Oak and Dow Jones go up and down completely randomly.
Pair Corralation between Black Oak and Dow Jones
Assuming the 90 days horizon Black Oak is expected to generate 2.3 times less return on investment than Dow Jones. In addition to that, Black Oak is 1.39 times more volatile than Dow Jones Industrial. It trades about 0.08 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.26 per unit of volatility. If you would invest 4,238,757 in Dow Jones Industrial on August 28, 2024 and sell it today you would earn a total of 234,900 from holding Dow Jones Industrial or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Black Oak Emerging vs. Dow Jones Industrial
Performance |
| Timeline |
Black Oak and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Black Oak Emerging
Pair trading matchups for Black Oak
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Black Oak and Dow Jones
The main advantage of trading using opposite Black Oak and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Oak 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.| Black Oak vs. Red Oak Technology | Black Oak vs. Pin Oak Equity | Black Oak vs. White Oak Select | Black Oak vs. Live Oak Health |
| 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |