Correlation Between Dow Jones and Jean
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Jean 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 Jean 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 Jean Co, you can compare the effects of market volatilities on Dow Jones and Jean 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 Jean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Jean.
Diversification Opportunities for Dow Jones and Jean
Excellent diversification
The 3 months correlation between Dow and Jean is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Jean Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jean 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 Jean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jean has no effect on the direction of Dow Jones i.e., Dow Jones and Jean go up and down completely randomly.
Pair Corralation between Dow Jones and Jean
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.12 times less return on investment than Jean. But when comparing it to its historical volatility, Dow Jones Industrial is 2.22 times less risky than Jean. It trades about 0.38 of its potential returns per unit of risk. Jean Co is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 2,365 in Jean Co on September 3, 2024 and sell it today you would earn a total of 200.00 from holding Jean Co or generate 8.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Dow Jones Industrial vs. Jean Co
Performance |
| Timeline |
Dow Jones and Jean Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Jean Co
Pair trading matchups for Jean
Pair Trading with Dow Jones and Jean
The main advantage of trading using opposite Dow Jones and Jean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Jean 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 Jean will offset losses from the drop in Jean's long position.| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
| Jean vs. Tainan Spinning Co | Jean vs. Chia Her Industrial | Jean vs. WiseChip Semiconductor | Jean vs. Novatek Microelectronics Corp |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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