Correlation Between Dow Jones and OLIPASS
Can any of the company-specific risk be diversified away by investing in both Dow Jones and OLIPASS 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 OLIPASS 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 OLIPASS, you can compare the effects of market volatilities on Dow Jones and OLIPASS 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 OLIPASS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and OLIPASS.
Diversification Opportunities for Dow Jones and OLIPASS
Very good diversification
The 3 months correlation between Dow and OLIPASS is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and OLIPASS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OLIPASS 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 OLIPASS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OLIPASS has no effect on the direction of Dow Jones i.e., Dow Jones and OLIPASS go up and down completely randomly.
Pair Corralation between Dow Jones and OLIPASS
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the OLIPASS. But the index apears to be less risky and, when comparing its historical volatility, Dow Jones Industrial is 9.57 times less risky than OLIPASS. The index trades about -0.19 of its potential returns per unit of risk. The OLIPASS is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 228,000 in OLIPASS on November 28, 2024 and sell it today you would earn a total of 25,000 from holding OLIPASS or generate 10.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 85.71% |
| Values | Daily Returns |
Dow Jones Industrial vs. OLIPASS
Performance |
| Timeline |
Dow Jones and OLIPASS Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
OLIPASS
Pair trading matchups for OLIPASS
Pair Trading with Dow Jones and OLIPASS
The main advantage of trading using opposite Dow Jones and OLIPASS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, OLIPASS 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 OLIPASS will offset losses from the drop in OLIPASS's long position.| Dow Jones vs. Gladstone Investment | Dow Jones vs. BW Offshore Limited | Dow Jones vs. Fidus Investment Corp | Dow Jones vs. Aperture Health |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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