Correlation Between California BanCorp and Dow Jones
Can any of the company-specific risk be diversified away by investing in both California BanCorp 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 California BanCorp and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between California BanCorp and Dow Jones Industrial, you can compare the effects of market volatilities on California BanCorp 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 California BanCorp with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of California BanCorp and Dow Jones.
Diversification Opportunities for California BanCorp and Dow Jones
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between California and Dow is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding California BanCorp 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 California BanCorp 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 California BanCorp 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 California BanCorp i.e., California BanCorp and Dow Jones go up and down completely randomly.
Pair Corralation between California BanCorp and Dow Jones
Given the investment horizon of 90 days California BanCorp is expected to under-perform the Dow Jones. In addition to that, California BanCorp is 7.61 times more volatile than Dow Jones Industrial. It trades about -0.04 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.09 per unit of volatility. If you would invest 3,351,765 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 1,139,300 from holding Dow Jones Industrial or generate 33.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 82.43% |
| Values | Daily Returns |
California BanCorp vs. Dow Jones Industrial
Performance |
| Timeline |
California BanCorp and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
California BanCorp
Pair trading matchups for California BanCorp
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with California BanCorp and Dow Jones
The main advantage of trading using opposite California BanCorp and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California BanCorp 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.| California BanCorp vs. Home Federal Bancorp | California BanCorp vs. First Financial Northwest | California BanCorp vs. First Northwest Bancorp | California BanCorp vs. First Capital |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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