Correlation Between Desjardins Alt and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Desjardins Alt 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 Desjardins Alt and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Desjardins Alt LongShort and Dow Jones Industrial, you can compare the effects of market volatilities on Desjardins Alt 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 Desjardins Alt with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Desjardins Alt and Dow Jones.
Diversification Opportunities for Desjardins Alt and Dow Jones
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Desjardins and Dow is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Desjardins Alt LongShort 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 Desjardins Alt 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 Desjardins Alt LongShort 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 Desjardins Alt i.e., Desjardins Alt and Dow Jones go up and down completely randomly.
Pair Corralation between Desjardins Alt and Dow Jones
Assuming the 90 days trading horizon Desjardins Alt LongShort is expected to generate 0.14 times more return on investment than Dow Jones. However, Desjardins Alt LongShort is 7.18 times less risky than Dow Jones. It trades about -0.11 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.21 per unit of risk. If you would invest 2,077 in Desjardins Alt LongShort on November 28, 2024 and sell it today you would lose (4.00) from holding Desjardins Alt LongShort or give up 0.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Desjardins Alt LongShort vs. Dow Jones Industrial
Performance |
| Timeline |
Desjardins Alt and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Desjardins Alt LongShort
Pair trading matchups for Desjardins Alt
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Desjardins Alt and Dow Jones
The main advantage of trading using opposite Desjardins Alt and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Desjardins Alt 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.| Desjardins Alt vs. Desjardins American Equity | Desjardins Alt vs. Desjardins RI Canada | Desjardins Alt vs. Desjardins RI Canada | Desjardins Alt vs. Desjardins Canadian Corporate |
| Dow Jones vs. Starbucks | Dow Jones vs. Westinghouse Air Brake | Dow Jones vs. Finnair Oyj | Dow Jones vs. Mesa Air 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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