Correlation Between Dow Jones and SOL IHS
Can any of the company-specific risk be diversified away by investing in both Dow Jones and SOL IHS 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 SOL IHS 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 SOL IHS Markit, you can compare the effects of market volatilities on Dow Jones and SOL IHS 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 SOL IHS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and SOL IHS.
Diversification Opportunities for Dow Jones and SOL IHS
Good diversification
The 3 months correlation between Dow and SOL is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and SOL IHS Markit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOL IHS Markit 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 SOL IHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOL IHS Markit has no effect on the direction of Dow Jones i.e., Dow Jones and SOL IHS go up and down completely randomly.
Pair Corralation between Dow Jones and SOL IHS
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.41 times more return on investment than SOL IHS. However, Dow Jones Industrial is 2.45 times less risky than SOL IHS. It trades about 0.33 of its potential returns per unit of risk. SOL IHS Markit is currently generating about 0.12 per unit of risk. If you would invest 4,239,227 in Dow Jones Industrial on November 3, 2024 and sell it today you would earn a total of 215,239 from holding Dow Jones Industrial or generate 5.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Dow Jones Industrial vs. SOL IHS Markit
Performance |
| Timeline |
Dow Jones and SOL IHS Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
SOL IHS Markit
Pair trading matchups for SOL IHS
Pair Trading with Dow Jones and SOL IHS
The main advantage of trading using opposite Dow Jones and SOL IHS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, SOL IHS 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 SOL IHS will offset losses from the drop in SOL IHS's long position.| Dow Jones vs. Rambler Metals and | Dow Jones vs. Nicola Mining | Dow Jones vs. Old Dominion Freight | Dow Jones vs. United Guardian |
| SOL IHS vs. 453950 | SOL IHS vs. Busan Industrial Co | SOL IHS vs. Busan Ind | SOL IHS vs. Mirae Asset Daewoo |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |