Correlation Between Dow Jones and Assems
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Assems 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 Assems 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 Assems Inc, you can compare the effects of market volatilities on Dow Jones and Assems 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 Assems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Assems.
Diversification Opportunities for Dow Jones and Assems
Modest diversification
The 3 months correlation between Dow and Assems is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Assems Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assems Inc 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 Assems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assems Inc has no effect on the direction of Dow Jones i.e., Dow Jones and Assems go up and down completely randomly.
Pair Corralation between Dow Jones and Assems
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.28 times more return on investment than Assems. However, Dow Jones Industrial is 3.52 times less risky than Assems. It trades about 0.08 of its potential returns per unit of risk. Assems Inc is currently generating about -0.02 per unit of risk. If you would invest 3,400,504 in Dow Jones Industrial on September 2, 2024 and sell it today you would earn a total of 1,090,561 from holding Dow Jones Industrial or generate 32.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.58% |
| Values | Daily Returns |
Dow Jones Industrial vs. Assems Inc
Performance |
| Timeline |
Dow Jones and Assems Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Assems Inc
Pair trading matchups for Assems
Pair Trading with Dow Jones and Assems
The main advantage of trading using opposite Dow Jones and Assems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Assems 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 Assems will offset losses from the drop in Assems' long position.| Dow Jones vs. Dream Finders Homes | Dow Jones vs. GEN Restaurant Group, | Dow Jones vs. National Beverage Corp | Dow Jones vs. BJs Restaurants |
| Assems vs. Samsung Electronics Co | Assems vs. Samsung Electronics Co | Assems vs. LG Energy Solution | Assems vs. SK Hynix |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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