Correlation Between Dow Jones and Castles Technology
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Castles Technology 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 Castles Technology 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 Castles Technology Co, you can compare the effects of market volatilities on Dow Jones and Castles Technology 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 Castles Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Castles Technology.
Diversification Opportunities for Dow Jones and Castles Technology
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Castles is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Castles Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Castles Technology 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 Castles Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Castles Technology has no effect on the direction of Dow Jones i.e., Dow Jones and Castles Technology go up and down completely randomly.
Pair Corralation between Dow Jones and Castles Technology
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.92 times less return on investment than Castles Technology. But when comparing it to its historical volatility, Dow Jones Industrial is 4.08 times less risky than Castles Technology. It trades about 0.07 of its potential returns per unit of risk. Castles Technology Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 6,383 in Castles Technology Co on October 13, 2024 and sell it today you would earn a total of 1,707 from holding Castles Technology Co or generate 26.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.18% |
| Values | Daily Returns |
Dow Jones Industrial vs. Castles Technology Co
Performance |
| Timeline |
Dow Jones and Castles Technology Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Castles Technology Co
Pair trading matchups for Castles Technology
Pair Trading with Dow Jones and Castles Technology
The main advantage of trading using opposite Dow Jones and Castles Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Castles Technology 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 Castles Technology will offset losses from the drop in Castles Technology's long position.| Dow Jones vs. BRP Inc | Dow Jones vs. Magnite | Dow Jones vs. Integral Ad Science | Dow Jones vs. Global E Online |
| Castles Technology vs. AVerMedia Technologies | Castles Technology vs. Min Aik Technology | Castles Technology vs. Jean Co | Castles Technology vs. Uniform Industrial Corp |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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