Correlation Between Dow Jones and HUA YU
Can any of the company-specific risk be diversified away by investing in both Dow Jones and HUA YU 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 HUA YU 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 HUA YU LIEN, you can compare the effects of market volatilities on Dow Jones and HUA YU 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 HUA YU. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and HUA YU.
Diversification Opportunities for Dow Jones and HUA YU
Pay attention - limited upside
The 3 months correlation between Dow and HUA is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and HUA YU LIEN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUA YU LIEN 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 HUA YU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUA YU LIEN has no effect on the direction of Dow Jones i.e., Dow Jones and HUA YU go up and down completely randomly.
Pair Corralation between Dow Jones and HUA YU
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.45 times more return on investment than HUA YU. However, Dow Jones Industrial is 2.22 times less risky than HUA YU. It trades about 0.37 of its potential returns per unit of risk. HUA YU LIEN is currently generating about -0.14 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. HUA YU LIEN
Performance |
| Timeline |
Dow Jones and HUA YU Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
HUA YU LIEN
Pair trading matchups for HUA YU
Pair Trading with Dow Jones and HUA YU
The main advantage of trading using opposite Dow Jones and HUA YU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, HUA YU 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 HUA YU will offset losses from the drop in HUA YU'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 |
| HUA YU vs. Advancetek Enterprise Co | HUA YU vs. GTM Holdings Corp | HUA YU vs. De Licacy Industrial | HUA YU vs. Shinkong Textile Co |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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