Correlation Between Dow Jones and Shinhan WTI
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Shinhan WTI 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 Shinhan WTI 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 Shinhan WTI Futures, you can compare the effects of market volatilities on Dow Jones and Shinhan WTI 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 Shinhan WTI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Shinhan WTI.
Diversification Opportunities for Dow Jones and Shinhan WTI
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dow and Shinhan is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Shinhan WTI Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan WTI Futures 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 Shinhan WTI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinhan WTI Futures has no effect on the direction of Dow Jones i.e., Dow Jones and Shinhan WTI go up and down completely randomly.
Pair Corralation between Dow Jones and Shinhan WTI
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.43 times more return on investment than Shinhan WTI. However, Dow Jones Industrial is 2.34 times less risky than Shinhan WTI. It trades about 0.29 of its potential returns per unit of risk. Shinhan WTI Futures is currently generating about 0.06 per unit of risk. If you would invest 4,273,213 in Dow Jones Industrial on November 4, 2024 and sell it today you would earn a total of 181,253 from holding Dow Jones Industrial or generate 4.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Shinhan WTI Futures
Performance |
| Timeline |
Dow Jones and Shinhan WTI Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Shinhan WTI Futures
Pair trading matchups for Shinhan WTI
Pair Trading with Dow Jones and Shinhan WTI
The main advantage of trading using opposite Dow Jones and Shinhan WTI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Shinhan WTI 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 Shinhan WTI will offset losses from the drop in Shinhan WTI'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 |
| Shinhan WTI vs. DB Financial Investment | Shinhan WTI vs. Hyundai Industrial Co | Shinhan WTI vs. PJ Metal Co | Shinhan WTI vs. Formetal Co |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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