Correlation Between BTB Real and Dow Jones
Can any of the company-specific risk be diversified away by investing in both BTB Real 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 BTB Real and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BTB Real Estate and Dow Jones Industrial, you can compare the effects of market volatilities on BTB Real 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 BTB Real with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of BTB Real and Dow Jones.
Diversification Opportunities for BTB Real and Dow Jones
Poor diversification
The 3 months correlation between BTB and Dow is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding BTB Real Estate 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 BTB Real 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 BTB Real Estate 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 BTB Real i.e., BTB Real and Dow Jones go up and down completely randomly.
Pair Corralation between BTB Real and Dow Jones
Assuming the 90 days trading horizon BTB Real Estate is expected to under-perform the Dow Jones. In addition to that, BTB Real is 1.47 times more volatile than Dow Jones Industrial. It trades about -0.12 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.27 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 247,274 from holding Dow Jones Industrial or generate 5.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BTB Real Estate vs. Dow Jones Industrial
Performance |
| Timeline |
BTB Real and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
BTB Real Estate
Pair trading matchups for BTB Real
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with BTB Real and Dow Jones
The main advantage of trading using opposite BTB Real and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BTB Real 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.| BTB Real vs. True North Commercial | BTB Real vs. Slate Office REIT | BTB Real vs. Inovalis Real Estate | BTB Real vs. Pro Real Estate |
| 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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