Correlation Between Dow Jones and ALTEOGEN
Can any of the company-specific risk be diversified away by investing in both Dow Jones and ALTEOGEN 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 ALTEOGEN 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 ALTEOGEN, you can compare the effects of market volatilities on Dow Jones and ALTEOGEN 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 ALTEOGEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and ALTEOGEN.
Diversification Opportunities for Dow Jones and ALTEOGEN
Good diversification
The 3 months correlation between Dow and ALTEOGEN is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and ALTEOGEN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALTEOGEN 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 ALTEOGEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALTEOGEN has no effect on the direction of Dow Jones i.e., Dow Jones and ALTEOGEN go up and down completely randomly.
Pair Corralation between Dow Jones and ALTEOGEN
Assuming the 90 days trading horizon Dow Jones is expected to generate 3.33 times less return on investment than ALTEOGEN. But when comparing it to its historical volatility, Dow Jones Industrial is 4.11 times less risky than ALTEOGEN. It trades about 0.28 of its potential returns per unit of risk. ALTEOGEN is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 31,550,000 in ALTEOGEN on November 6, 2024 and sell it today you would earn a total of 3,700,000 from holding ALTEOGEN or generate 11.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 89.47% |
| Values | Daily Returns |
Dow Jones Industrial vs. ALTEOGEN
Performance |
| Timeline |
Dow Jones and ALTEOGEN Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
ALTEOGEN
Pair trading matchups for ALTEOGEN
Pair Trading with Dow Jones and ALTEOGEN
The main advantage of trading using opposite Dow Jones and ALTEOGEN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, ALTEOGEN 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 ALTEOGEN will offset losses from the drop in ALTEOGEN's long position.| Dow Jones vs. Mako Mining Corp | Dow Jones vs. Reyna Silver Corp | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. Trupanion |
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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