Correlation Between Dow Jones and Ruentex Industries
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Ruentex 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 Ruentex 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 Ruentex Industries, you can compare the effects of market volatilities on Dow Jones and Ruentex 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 Ruentex Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Ruentex Industries.
Diversification Opportunities for Dow Jones and Ruentex Industries
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dow and Ruentex is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Ruentex Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ruentex 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 Ruentex Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ruentex Industries has no effect on the direction of Dow Jones i.e., Dow Jones and Ruentex Industries go up and down completely randomly.
Pair Corralation between Dow Jones and Ruentex Industries
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.73 times more return on investment than Ruentex Industries. However, Dow Jones Industrial is 1.37 times less risky than Ruentex Industries. It trades about -0.01 of its potential returns per unit of risk. Ruentex Industries is currently generating about -0.32 per unit of risk. If you would invest 4,473,657 in Dow Jones Industrial on October 26, 2024 and sell it today you would lose (17,150) from holding Dow Jones Industrial or give up 0.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 93.02% |
| Values | Daily Returns |
Dow Jones Industrial vs. Ruentex Industries
Performance |
| Timeline |
Dow Jones and Ruentex Industries Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Ruentex Industries
Pair trading matchups for Ruentex Industries
Pair Trading with Dow Jones and Ruentex Industries
The main advantage of trading using opposite Dow Jones and Ruentex Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Ruentex 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 Ruentex Industries will offset losses from the drop in Ruentex Industries' long position.| Dow Jones vs. Asure Software | Dow Jones vs. Amkor Technology | Dow Jones vs. Radcom | Dow Jones vs. Senmiao Technology |
| Ruentex Industries vs. Ruentex Development Co | Ruentex Industries vs. Fubon Financial Holding | Ruentex Industries vs. Cathay Financial Holding | Ruentex Industries vs. Pou Chen 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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