Correlation Between Dow Jones and Hey Song
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Hey Song 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 Hey Song 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 Hey Song Corp, you can compare the effects of market volatilities on Dow Jones and Hey Song 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 Hey Song. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Hey Song.
Diversification Opportunities for Dow Jones and Hey Song
Very good diversification
The 3 months correlation between Dow and Hey is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Hey Song Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hey Song Corp 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 Hey Song. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hey Song Corp has no effect on the direction of Dow Jones i.e., Dow Jones and Hey Song go up and down completely randomly.
Pair Corralation between Dow Jones and Hey Song
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.07 times more return on investment than Hey Song. However, Dow Jones is 1.07 times more volatile than Hey Song Corp. It trades about 0.12 of its potential returns per unit of risk. Hey Song Corp is currently generating about 0.04 per unit of risk. If you would invest 3,466,372 in Dow Jones Industrial on September 3, 2024 and sell it today you would earn a total of 1,011,828 from holding Dow Jones Industrial or generate 29.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.74% |
| Values | Daily Returns |
Dow Jones Industrial vs. Hey Song Corp
Performance |
| Timeline |
Dow Jones and Hey Song Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Hey Song Corp
Pair trading matchups for Hey Song
Pair Trading with Dow Jones and Hey Song
The main advantage of trading using opposite Dow Jones and Hey Song positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Hey Song 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 Hey Song will offset losses from the drop in Hey Song's long position.| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
| Hey Song vs. TTET Union Corp | Hey Song vs. Uni President Enterprises Corp | Hey Song vs. Charoen Pokphand Enterprise |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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