Correlation Between DHT Holdings and Dow Jones
Can any of the company-specific risk be diversified away by investing in both DHT Holdings 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 DHT Holdings and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DHT Holdings and Dow Jones Industrial, you can compare the effects of market volatilities on DHT Holdings 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 DHT Holdings with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of DHT Holdings and Dow Jones.
Diversification Opportunities for DHT Holdings and Dow Jones
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between DHT and Dow is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding DHT Holdings 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 DHT Holdings 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 DHT Holdings 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 DHT Holdings i.e., DHT Holdings and Dow Jones go up and down completely randomly.
Pair Corralation between DHT Holdings and Dow Jones
Considering the 90-day investment horizon DHT Holdings is expected to under-perform the Dow Jones. In addition to that, DHT Holdings is 2.15 times more volatile than Dow Jones Industrial. It trades about -0.02 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.22 per unit of volatility. If you would invest 4,238,757 in Dow Jones Industrial on August 27, 2024 and sell it today you would earn a total of 190,894 from holding Dow Jones Industrial or generate 4.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DHT Holdings vs. Dow Jones Industrial
Performance |
| Timeline |
DHT Holdings and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
DHT Holdings
Pair trading matchups for DHT Holdings
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with DHT Holdings and Dow Jones
The main advantage of trading using opposite DHT Holdings and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DHT Holdings 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.| DHT Holdings vs. Teekay Tankers | DHT Holdings vs. Frontline | DHT Holdings vs. International Seaways | DHT Holdings vs. Scorpio Tankers |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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