Correlation Between Dow Jones and Sambo Corrugated
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Sambo Corrugated 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 Sambo Corrugated 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 Sambo Corrugated Board, you can compare the effects of market volatilities on Dow Jones and Sambo Corrugated 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 Sambo Corrugated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Sambo Corrugated.
Diversification Opportunities for Dow Jones and Sambo Corrugated
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dow and Sambo is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Sambo Corrugated Board in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sambo Corrugated Board 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 Sambo Corrugated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sambo Corrugated Board has no effect on the direction of Dow Jones i.e., Dow Jones and Sambo Corrugated go up and down completely randomly.
Pair Corralation between Dow Jones and Sambo Corrugated
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.07 times more return on investment than Sambo Corrugated. However, Dow Jones is 1.07 times more volatile than Sambo Corrugated Board. It trades about 0.37 of its potential returns per unit of risk. Sambo Corrugated Board is currently generating about -0.24 per unit of risk. If you would invest 4,179,460 in Dow Jones Industrial on September 5, 2024 and sell it today you would earn a total of 321,944 from holding Dow Jones Industrial or generate 7.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Dow Jones Industrial vs. Sambo Corrugated Board
Performance |
| Timeline |
Dow Jones and Sambo Corrugated Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Sambo Corrugated Board
Pair trading matchups for Sambo Corrugated
Pair Trading with Dow Jones and Sambo Corrugated
The main advantage of trading using opposite Dow Jones and Sambo Corrugated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Sambo Corrugated 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 Sambo Corrugated will offset losses from the drop in Sambo Corrugated's long position.| Dow Jones vs. Shake Shack | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. Dave Busters Entertainment | Dow Jones vs. Meli Hotels International |
| Sambo Corrugated vs. Hanil Iron Steel | Sambo Corrugated vs. Pungguk Ethanol Industrial | Sambo Corrugated vs. Dongbu Steel Co | Sambo Corrugated vs. Aprogen Healthcare Games |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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