Correlation Between Dow Jones and Wenzhou Hongfeng
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By analyzing existing cross correlation between Dow Jones Industrial and Wenzhou Hongfeng Electrical, you can compare the effects of market volatilities on Dow Jones and Wenzhou Hongfeng 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 Wenzhou Hongfeng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Wenzhou Hongfeng.
Diversification Opportunities for Dow Jones and Wenzhou Hongfeng
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dow and Wenzhou is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Wenzhou Hongfeng Electrical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wenzhou Hongfeng Ele 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 Wenzhou Hongfeng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wenzhou Hongfeng Ele has no effect on the direction of Dow Jones i.e., Dow Jones and Wenzhou Hongfeng go up and down completely randomly.
Pair Corralation between Dow Jones and Wenzhou Hongfeng
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.19 times more return on investment than Wenzhou Hongfeng. However, Dow Jones Industrial is 5.17 times less risky than Wenzhou Hongfeng. It trades about -0.01 of its potential returns per unit of risk. Wenzhou Hongfeng Electrical is currently generating about -0.01 per unit of risk. If you would invest 4,429,313 in Dow Jones Industrial on September 12, 2024 and sell it today you would lose (4,530) from holding Dow Jones Industrial or give up 0.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 91.3% |
| Values | Daily Returns |
Dow Jones Industrial vs. Wenzhou Hongfeng Electrical
Performance |
| Timeline |
Dow Jones and Wenzhou Hongfeng Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Wenzhou Hongfeng Electrical
Pair trading matchups for Wenzhou Hongfeng
Pair Trading with Dow Jones and Wenzhou Hongfeng
The main advantage of trading using opposite Dow Jones and Wenzhou Hongfeng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Wenzhou Hongfeng 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 Wenzhou Hongfeng will offset losses from the drop in Wenzhou Hongfeng's long position.| Dow Jones vs. Aeye Inc | Dow Jones vs. Gentex | Dow Jones vs. Marine Products | Dow Jones vs. CarsalesCom Ltd ADR |
| Wenzhou Hongfeng vs. YLZ Information Tech | Wenzhou Hongfeng vs. Xiamen Goldenhome Co | Wenzhou Hongfeng vs. ButOne Information Corp | Wenzhou Hongfeng vs. Nanxing Furniture Machinery |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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