Correlation Between Dow Jones and CCL Industries
Can any of the company-specific risk be diversified away by investing in both Dow Jones and CCL Industries 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 CCL Industries 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 CCL Industries, you can compare the effects of market volatilities on Dow Jones and CCL Industries 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 CCL Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and CCL Industries.
Diversification Opportunities for Dow Jones and CCL Industries
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dow and CCL is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and CCL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCL Industries 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 CCL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCL Industries has no effect on the direction of Dow Jones i.e., Dow Jones and CCL Industries go up and down completely randomly.
Pair Corralation between Dow Jones and CCL Industries
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.64 times more return on investment than CCL Industries. However, Dow Jones Industrial is 1.57 times less risky than CCL Industries. It trades about 0.38 of its potential returns per unit of risk. CCL Industries is currently generating about -0.08 per unit of risk. If you would invest 4,179,460 in Dow Jones Industrial on September 3, 2024 and sell it today you would earn a total of 311,605 from holding Dow Jones Industrial or generate 7.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Dow Jones Industrial vs. CCL Industries
Performance |
| Timeline |
Dow Jones and CCL Industries Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
CCL Industries
Pair trading matchups for CCL Industries
Pair Trading with Dow Jones and CCL Industries
The main advantage of trading using opposite Dow Jones and CCL Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, CCL Industries 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 CCL Industries will offset losses from the drop in CCL Industries' long position.| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
| CCL Industries vs. AptarGroup | CCL Industries vs. Superior Plus Corp | CCL Industries vs. NMI Holdings | CCL Industries vs. Origin Agritech |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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