Correlation Between DIA and CNN
Can any of the company-specific risk be diversified away by investing in both DIA and CNN 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 DIA and CNN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DIA and CNN, you can compare the effects of market volatilities on DIA and CNN 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 DIA with a short position of CNN. Check out your portfolio center. Please also check ongoing floating volatility patterns of DIA and CNN.
Diversification Opportunities for DIA and CNN
Pay attention - limited upside
The 3 months correlation between DIA and CNN is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding DIA and CNN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNN and DIA 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 DIA are associated (or correlated) with CNN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNN has no effect on the direction of DIA i.e., DIA and CNN go up and down completely randomly.
Pair Corralation between DIA and CNN
If you would invest 0.00 in CNN on August 27, 2024 and sell it today you would earn a total of 0.00 from holding CNN or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
DIA vs. CNN
Performance |
| Timeline |
| DIA |
| CNN |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
DIA and CNN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DIA and CNN
The main advantage of trading using opposite DIA and CNN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DIA position performs unexpectedly, CNN 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 CNN will offset losses from the drop in CNN's long position.The idea behind DIA and CNN pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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