Correlation Between Scepter Holdings and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Scepter Holdings 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 Scepter Holdings and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scepter Holdings and Dow Jones Industrial, you can compare the effects of market volatilities on Scepter Holdings 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 Scepter Holdings with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scepter Holdings and Dow Jones.
Diversification Opportunities for Scepter Holdings and Dow Jones
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Scepter and Dow is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Scepter Holdings 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 Scepter Holdings 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 Scepter Holdings 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 Scepter Holdings i.e., Scepter Holdings and Dow Jones go up and down completely randomly.
Pair Corralation between Scepter Holdings and Dow Jones
Given the investment horizon of 90 days Scepter Holdings is expected to generate 23.59 times more return on investment than Dow Jones. However, Scepter Holdings is 23.59 times more volatile than Dow Jones Industrial. It trades about 0.11 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 0.05 in Scepter Holdings on August 25, 2024 and sell it today you would earn a total of 0.03 from holding Scepter Holdings or generate 60.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scepter Holdings vs. Dow Jones Industrial
Performance |
| Timeline |
Scepter Holdings and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Scepter Holdings
Pair trading matchups for Scepter Holdings
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Scepter Holdings and Dow Jones
The main advantage of trading using opposite Scepter Holdings and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scepter Holdings 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.| Scepter Holdings vs. Artisan Consumer Goods | Scepter Holdings vs. Aryzta AG PK | Scepter Holdings vs. The A2 Milk | Scepter Holdings vs. BioAdaptives |
| 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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