Correlation Between DIA and Peanut The
Can any of the company-specific risk be diversified away by investing in both DIA and Peanut The 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 Peanut The into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DIA and Peanut the Squirrel, you can compare the effects of market volatilities on DIA and Peanut The 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 Peanut The. Check out your portfolio center. Please also check ongoing floating volatility patterns of DIA and Peanut The.
Diversification Opportunities for DIA and Peanut The
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between DIA and Peanut is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding DIA and Peanut the Squirrel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peanut the Squirrel 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 Peanut The. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peanut the Squirrel has no effect on the direction of DIA i.e., DIA and Peanut The go up and down completely randomly.
Pair Corralation between DIA and Peanut The
Assuming the 90 days trading horizon DIA is expected to generate 0.47 times more return on investment than Peanut The. However, DIA is 2.12 times less risky than Peanut The. It trades about 0.08 of its potential returns per unit of risk. Peanut the Squirrel is currently generating about 0.03 per unit of risk. If you would invest 68.00 in DIA on October 20, 2024 and sell it today you would earn a total of 5.00 from holding DIA or generate 7.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DIA vs. Peanut the Squirrel
Performance |
| Timeline |
| DIA |
| Peanut the Squirrel |
DIA and Peanut The Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DIA and Peanut The
The main advantage of trading using opposite DIA and Peanut The positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DIA position performs unexpectedly, Peanut The 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 Peanut The will offset losses from the drop in Peanut The's long position.The idea behind DIA and Peanut the Squirrel 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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