Correlation Between Chemed Corp and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Chemed Corp 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 Chemed Corp and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chemed Corp and Dow Jones Industrial, you can compare the effects of market volatilities on Chemed Corp 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 Chemed Corp with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemed Corp and Dow Jones.
Diversification Opportunities for Chemed Corp and Dow Jones
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Chemed and Dow is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Chemed 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 Chemed Corp 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 Chemed 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 Chemed Corp i.e., Chemed Corp and Dow Jones go up and down completely randomly.
Pair Corralation between Chemed Corp and Dow Jones
Considering the 90-day investment horizon Chemed Corp is expected to under-perform the Dow Jones. In addition to that, Chemed Corp is 2.97 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chemed Corp vs. Dow Jones Industrial
Performance |
| Timeline |
Chemed Corp and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Chemed Corp
Pair trading matchups for Chemed Corp
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Chemed Corp and Dow Jones
The main advantage of trading using opposite Chemed Corp and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemed Corp 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.| Chemed Corp vs. Encompass Health Corp | Chemed Corp vs. Pennant Group | Chemed Corp vs. Acadia Healthcare | Chemed Corp vs. Select Medical Holdings |
| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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