Correlation Between Dow Jones and XAC Automation
Can any of the company-specific risk be diversified away by investing in both Dow Jones and XAC Automation 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 XAC Automation 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 XAC Automation, you can compare the effects of market volatilities on Dow Jones and XAC Automation 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 XAC Automation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and XAC Automation.
Diversification Opportunities for Dow Jones and XAC Automation
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and XAC is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and XAC Automation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XAC Automation 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 XAC Automation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XAC Automation has no effect on the direction of Dow Jones i.e., Dow Jones and XAC Automation go up and down completely randomly.
Pair Corralation between Dow Jones and XAC Automation
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.36 times more return on investment than XAC Automation. However, Dow Jones Industrial is 2.78 times less risky than XAC Automation. It trades about 0.08 of its potential returns per unit of risk. XAC Automation is currently generating about 0.03 per unit of risk. If you would invest 3,410,864 in Dow Jones Industrial on September 3, 2024 and sell it today you would earn a total of 1,080,201 from holding Dow Jones Industrial or generate 31.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.97% |
| Values | Daily Returns |
Dow Jones Industrial vs. XAC Automation
Performance |
| Timeline |
Dow Jones and XAC Automation Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
XAC Automation
Pair trading matchups for XAC Automation
Pair Trading with Dow Jones and XAC Automation
The main advantage of trading using opposite Dow Jones and XAC Automation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, XAC Automation 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 XAC Automation will offset losses from the drop in XAC Automation's long position.| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
| XAC Automation vs. Chinese Maritime Transport | XAC Automation vs. Lian Hwa Foods | XAC Automation vs. Emerging Display Technologies | XAC Automation vs. Mercuries Life Insurance |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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