Correlation Between Dow Jones and YTL Hospitality
Can any of the company-specific risk be diversified away by investing in both Dow Jones and YTL Hospitality 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 YTL Hospitality 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 YTL Hospitality REIT, you can compare the effects of market volatilities on Dow Jones and YTL Hospitality 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 YTL Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and YTL Hospitality.
Diversification Opportunities for Dow Jones and YTL Hospitality
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dow and YTL is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and YTL Hospitality REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YTL Hospitality REIT 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 YTL Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YTL Hospitality REIT has no effect on the direction of Dow Jones i.e., Dow Jones and YTL Hospitality go up and down completely randomly.
Pair Corralation between Dow Jones and YTL Hospitality
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.17 times more return on investment than YTL Hospitality. However, Dow Jones is 1.17 times more volatile than YTL Hospitality REIT. It trades about 0.37 of its potential returns per unit of risk. YTL Hospitality REIT is currently generating about 0.05 per unit of risk. If you would invest 4,176,346 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 314,719 from holding Dow Jones Industrial or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. YTL Hospitality REIT
Performance |
| Timeline |
Dow Jones and YTL Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
YTL Hospitality REIT
Pair trading matchups for YTL Hospitality
Pair Trading with Dow Jones and YTL Hospitality
The main advantage of trading using opposite Dow Jones and YTL Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, YTL Hospitality 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 YTL Hospitality will offset losses from the drop in YTL Hospitality's long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| YTL Hospitality vs. Eversafe Rubber Bhd | YTL Hospitality vs. Kluang Rubber | YTL Hospitality vs. FARM FRESH BERHAD | YTL Hospitality vs. JF Technology BHD |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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