Correlation Between Clean Harbors and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Clean Harbors 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 Clean Harbors and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clean Harbors and Dow Jones Industrial, you can compare the effects of market volatilities on Clean Harbors 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 Clean Harbors with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Harbors and Dow Jones.
Diversification Opportunities for Clean Harbors and Dow Jones
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Clean and Dow is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Clean Harbors 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 Clean Harbors 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 Clean Harbors 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 Clean Harbors i.e., Clean Harbors and Dow Jones go up and down completely randomly.
Pair Corralation between Clean Harbors and Dow Jones
Considering the 90-day investment horizon Clean Harbors is expected to generate 2.64 times less return on investment than Dow Jones. In addition to that, Clean Harbors is 3.32 times more volatile than Dow Jones Industrial. It trades about 0.03 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clean Harbors vs. Dow Jones Industrial
Performance |
| Timeline |
Clean Harbors and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Clean Harbors
Pair trading matchups for Clean Harbors
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Clean Harbors and Dow Jones
The main advantage of trading using opposite Clean Harbors and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Harbors 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.| Clean Harbors vs. Waste Connections | Clean Harbors vs. Casella Waste Systems | Clean Harbors vs. Waste Management | Clean Harbors vs. Gfl Environmental Holdings |
| 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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