Correlation Between Dow Jones and Mercuries Life
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Mercuries Life 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 Mercuries Life 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 Mercuries Life Insurance, you can compare the effects of market volatilities on Dow Jones and Mercuries Life 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 Mercuries Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Mercuries Life.
Diversification Opportunities for Dow Jones and Mercuries Life
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dow and Mercuries is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Mercuries Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercuries Life Insurance 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 Mercuries Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercuries Life Insurance has no effect on the direction of Dow Jones i.e., Dow Jones and Mercuries Life go up and down completely randomly.
Pair Corralation between Dow Jones and Mercuries Life
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.44 times more return on investment than Mercuries Life. However, Dow Jones Industrial is 2.26 times less risky than Mercuries Life. It trades about 0.07 of its potential returns per unit of risk. Mercuries Life Insurance is currently generating about 0.02 per unit of risk. If you would invest 3,394,710 in Dow Jones Industrial on August 24, 2024 and sell it today you would earn a total of 992,325 from holding Dow Jones Industrial or generate 29.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 96.77% |
| Values | Daily Returns |
Dow Jones Industrial vs. Mercuries Life Insurance
Performance |
| Timeline |
Dow Jones and Mercuries Life Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Mercuries Life Insurance
Pair trading matchups for Mercuries Life
Pair Trading with Dow Jones and Mercuries Life
The main advantage of trading using opposite Dow Jones and Mercuries Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Mercuries Life 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 Mercuries Life will offset losses from the drop in Mercuries Life's long position.| Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. Titan Machinery | Dow Jones vs. Simon Property Group |
| Mercuries Life vs. Fubon Financial Holding | Mercuries Life vs. Cathay Financial Holding | Mercuries Life vs. ESUN Financial Holding |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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