Correlation Between Dow Jones and Shanxi Tond
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By analyzing existing cross correlation between Dow Jones Industrial and Shanxi Tond Chemical, you can compare the effects of market volatilities on Dow Jones and Shanxi Tond 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 Dow Jones with a short position of Shanxi Tond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Shanxi Tond.
Diversification Opportunities for Dow Jones and Shanxi Tond
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Shanxi is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Shanxi Tond Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanxi Tond Chemical and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Shanxi Tond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanxi Tond Chemical has no effect on the direction of Dow Jones i.e., Dow Jones and Shanxi Tond go up and down completely randomly.
Pair Corralation between Dow Jones and Shanxi Tond
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.3 times more return on investment than Shanxi Tond. However, Dow Jones Industrial is 3.35 times less risky than Shanxi Tond. It trades about 0.12 of its potential returns per unit of risk. Shanxi Tond Chemical is currently generating about -0.02 per unit of risk. If you would invest 3,343,335 in Dow Jones Industrial on September 26, 2024 and sell it today you would earn a total of 986,368 from holding Dow Jones Industrial or generate 29.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.82% |
| Values | Daily Returns |
Dow Jones Industrial vs. Shanxi Tond Chemical
Performance |
| Timeline |
Dow Jones and Shanxi Tond Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Shanxi Tond Chemical
Pair trading matchups for Shanxi Tond
Pair Trading with Dow Jones and Shanxi Tond
The main advantage of trading using opposite Dow Jones and Shanxi Tond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Shanxi Tond 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 Shanxi Tond will offset losses from the drop in Shanxi Tond's long position.| Dow Jones vs. Sabre Corpo | Dow Jones vs. Cannae Holdings | Dow Jones vs. Pekin Life Insurance | Dow Jones vs. Supercom |
| Shanxi Tond vs. Zijin Mining Group | Shanxi Tond vs. Wanhua Chemical Group | Shanxi Tond vs. Baoshan Iron Steel | Shanxi Tond vs. Shandong Gold Mining |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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