Correlation Between Celestica and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Celestica 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 Celestica and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Celestica and Dow Jones Industrial, you can compare the effects of market volatilities on Celestica 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 Celestica with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Celestica and Dow Jones.
Diversification Opportunities for Celestica and Dow Jones
Very poor diversification
The 3 months correlation between Celestica and Dow is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Celestica 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 Celestica 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 Celestica 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 Celestica i.e., Celestica and Dow Jones go up and down completely randomly.
Pair Corralation between Celestica and Dow Jones
Assuming the 90 days trading horizon Celestica is expected to generate 3.25 times more return on investment than Dow Jones. However, Celestica is 3.25 times more volatile than Dow Jones Industrial. It trades about 0.28 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.27 per unit of risk. If you would invest 9,736 in Celestica on August 30, 2024 and sell it today you would earn a total of 1,934 from holding Celestica or generate 19.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Celestica vs. Dow Jones Industrial
Performance |
| Timeline |
Celestica and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Celestica
Pair trading matchups for Celestica
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Celestica and Dow Jones
The main advantage of trading using opposite Celestica and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Celestica 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.| Celestica vs. Descartes Systems Group | Celestica vs. CAE Inc | Celestica vs. CGI Inc | Celestica vs. Cogeco Communications |
| Dow Jones vs. Skillful Craftsman Education | Dow Jones vs. Acco Brands | Dow Jones vs. Cracker Barrel Old | Dow Jones vs. Coursera |
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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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