Correlation Between Dow Jones and ISU Chemical
Can any of the company-specific risk be diversified away by investing in both Dow Jones and ISU Chemical 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 Dow Jones and ISU Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and ISU Chemical Co, you can compare the effects of market volatilities on Dow Jones and ISU Chemical 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 ISU Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and ISU Chemical.
Diversification Opportunities for Dow Jones and ISU Chemical
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and ISU is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and ISU Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ISU 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 ISU Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ISU Chemical has no effect on the direction of Dow Jones i.e., Dow Jones and ISU Chemical go up and down completely randomly.
Pair Corralation between Dow Jones and ISU Chemical
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the ISU Chemical. But the index apears to be less risky and, when comparing its historical volatility, Dow Jones Industrial is 4.4 times less risky than ISU Chemical. The index trades about -0.27 of its potential returns per unit of risk. The ISU Chemical Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 599,000 in ISU Chemical Co on October 7, 2024 and sell it today you would earn a total of 27,000 from holding ISU Chemical Co or generate 4.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Dow Jones Industrial vs. ISU Chemical Co
Performance |
| Timeline |
Dow Jones and ISU Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
ISU Chemical Co
Pair trading matchups for ISU Chemical
Pair Trading with Dow Jones and ISU Chemical
The main advantage of trading using opposite Dow Jones and ISU Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, ISU Chemical 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 ISU Chemical will offset losses from the drop in ISU Chemical's long position.| Dow Jones vs. NetSol Technologies | Dow Jones vs. Q2 Holdings | Dow Jones vs. Weyco Group | Dow Jones vs. Newell Brands |
| ISU Chemical vs. AptaBio Therapeutics | ISU Chemical vs. Daewoo SBI SPAC | ISU Chemical vs. Dream Security co | ISU Chemical vs. Microfriend |
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.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |