Correlation Between Dow Jones and Berkshire Hills
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Berkshire Hills 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 Berkshire Hills 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 Berkshire Hills Bancorp, you can compare the effects of market volatilities on Dow Jones and Berkshire Hills 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 Berkshire Hills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Berkshire Hills.
Diversification Opportunities for Dow Jones and Berkshire Hills
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dow and Berkshire is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Berkshire Hills Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hills Bancorp 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 Berkshire Hills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkshire Hills Bancorp has no effect on the direction of Dow Jones i.e., Dow Jones and Berkshire Hills go up and down completely randomly.
Pair Corralation between Dow Jones and Berkshire Hills
Assuming the 90 days trading horizon Dow Jones is expected to generate 2.94 times less return on investment than Berkshire Hills. But when comparing it to its historical volatility, Dow Jones Industrial is 3.81 times less risky than Berkshire Hills. It trades about 0.16 of its potential returns per unit of risk. Berkshire Hills Bancorp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,904 in Berkshire Hills Bancorp on September 3, 2024 and sell it today you would earn a total of 936.00 from holding Berkshire Hills Bancorp or generate 49.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 96.9% |
| Values | Daily Returns |
Dow Jones Industrial vs. Berkshire Hills Bancorp
Performance |
| Timeline |
Dow Jones and Berkshire Hills Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Berkshire Hills Bancorp
Pair trading matchups for Berkshire Hills
Pair Trading with Dow Jones and Berkshire Hills
The main advantage of trading using opposite Dow Jones and Berkshire Hills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Berkshire Hills 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 Berkshire Hills will offset losses from the drop in Berkshire Hills' long position.| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
| Berkshire Hills vs. Postal Savings Bank | Berkshire Hills vs. CAIXABANK UNADR 13 | Berkshire Hills vs. Superior Plus Corp | Berkshire Hills vs. NMI Holdings |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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