Correlation Between Dow Jones and Eva Airways
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Eva Airways 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 Eva Airways 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 Eva Airways Corp, you can compare the effects of market volatilities on Dow Jones and Eva Airways 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 Eva Airways. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Eva Airways.
Diversification Opportunities for Dow Jones and Eva Airways
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dow and Eva is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Eva Airways Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eva Airways Corp 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 Eva Airways. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eva Airways Corp has no effect on the direction of Dow Jones i.e., Dow Jones and Eva Airways go up and down completely randomly.
Pair Corralation between Dow Jones and Eva Airways
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.14 times less return on investment than Eva Airways. But when comparing it to its historical volatility, Dow Jones Industrial is 2.19 times less risky than Eva Airways. It trades about 0.16 of its potential returns per unit of risk. Eva Airways Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,535 in Eva Airways Corp on September 1, 2024 and sell it today you would earn a total of 620.00 from holding Eva Airways Corp or generate 17.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Dow Jones Industrial vs. Eva Airways Corp
Performance |
| Timeline |
Dow Jones and Eva Airways Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Eva Airways Corp
Pair trading matchups for Eva Airways
Pair Trading with Dow Jones and Eva Airways
The main advantage of trading using opposite Dow Jones and Eva Airways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Eva Airways 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 Eva Airways will offset losses from the drop in Eva Airways' long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| Eva Airways vs. BES Engineering Co | Eva Airways vs. Continental Holdings Corp | Eva Airways vs. Kee Tai Properties | Eva Airways vs. Hung Sheng Construction |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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