Correlation Between Peabody Energy and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Peabody Energy 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 Peabody Energy and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Peabody Energy Corp and Dow Jones Industrial, you can compare the effects of market volatilities on Peabody Energy 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 Peabody Energy with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peabody Energy and Dow Jones.
Diversification Opportunities for Peabody Energy and Dow Jones
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Peabody and Dow is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Peabody Energy Corp 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 Peabody Energy 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 Peabody Energy Corp 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 Peabody Energy i.e., Peabody Energy and Dow Jones go up and down completely randomly.
Pair Corralation between Peabody Energy and Dow Jones
Considering the 90-day investment horizon Peabody Energy is expected to generate 1.01 times less return on investment than Dow Jones. In addition to that, Peabody Energy is 3.64 times more volatile than Dow Jones Industrial. It trades about 0.07 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 |
Peabody Energy Corp vs. Dow Jones Industrial
Performance |
| Timeline |
Peabody Energy and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Peabody Energy Corp
Pair trading matchups for Peabody Energy
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Peabody Energy and Dow Jones
The main advantage of trading using opposite Peabody Energy and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peabody Energy 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.| Peabody Energy vs. Alliance Resource Partners | Peabody Energy vs. Natural Resource Partners | Peabody Energy vs. Hallador Energy | Peabody Energy vs. NACCO Industries |
| 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |