Correlation Between Core Main and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Core Main 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 Core Main and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Core Main and Dow Jones Industrial, you can compare the effects of market volatilities on Core Main 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 Core Main with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Core Main and Dow Jones.
Diversification Opportunities for Core Main and Dow Jones
Significant diversification
The 3 months correlation between Core and Dow is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Core Main 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 Core Main 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 Core Main 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 Core Main i.e., Core Main and Dow Jones go up and down completely randomly.
Pair Corralation between Core Main and Dow Jones
Considering the 90-day investment horizon Core Main is expected to generate 3.11 times more return on investment than Dow Jones. However, Core Main is 3.11 times more volatile than Dow Jones Industrial. It trades about 0.09 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.09 per unit of risk. If you would invest 2,274 in Core Main on August 27, 2024 and sell it today you would earn a total of 2,480 from holding Core Main or generate 109.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Core Main vs. Dow Jones Industrial
Performance |
| Timeline |
Core Main and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Core Main
Pair trading matchups for Core Main
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Core Main and Dow Jones
The main advantage of trading using opposite Core Main and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Core Main 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.| Core Main vs. Distribution Solutions Group | Core Main vs. Global Industrial Co | Core Main vs. Applied Industrial Technologies | Core Main vs. BlueLinx 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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