Correlation Between Champion Iron and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Champion Iron 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 Champion Iron and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champion Iron and Dow Jones Industrial, you can compare the effects of market volatilities on Champion Iron 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 Champion Iron with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Iron and Dow Jones.
Diversification Opportunities for Champion Iron and Dow Jones
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Champion and Dow is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Champion Iron 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 Champion Iron 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 Champion Iron 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 Champion Iron i.e., Champion Iron and Dow Jones go up and down completely randomly.
Pair Corralation between Champion Iron and Dow Jones
Assuming the 90 days trading horizon Champion Iron is expected to under-perform the Dow Jones. In addition to that, Champion Iron is 3.13 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 0.29 per unit of volatility. If you would invest 4,273,213 in Dow Jones Industrial on November 4, 2024 and sell it today you would earn a total of 181,253 from holding Dow Jones Industrial or generate 4.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Champion Iron vs. Dow Jones Industrial
Performance |
| Timeline |
Champion Iron and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Champion Iron
Pair trading matchups for Champion Iron
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Champion Iron and Dow Jones
The main advantage of trading using opposite Champion Iron and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champion Iron 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.| Champion Iron vs. National Australia Bank | Champion Iron vs. Macquarie Technology Group | Champion Iron vs. Metals X | Champion Iron vs. Wt Financial Group |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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