Correlation Between Dow Jones and Lungyen Life
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Lungyen Life 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 Lungyen Life 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 Lungyen Life Service, you can compare the effects of market volatilities on Dow Jones and Lungyen Life 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 Lungyen Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Lungyen Life.
Diversification Opportunities for Dow Jones and Lungyen Life
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dow and Lungyen is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Lungyen Life Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lungyen Life Service 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 Lungyen Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lungyen Life Service has no effect on the direction of Dow Jones i.e., Dow Jones and Lungyen Life go up and down completely randomly.
Pair Corralation between Dow Jones and Lungyen Life
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.6 times more return on investment than Lungyen Life. However, Dow Jones Industrial is 1.66 times less risky than Lungyen Life. It trades about -0.26 of its potential returns per unit of risk. Lungyen Life Service is currently generating about -0.18 per unit of risk. If you would invest 4,382,806 in Dow Jones Industrial on October 14, 2024 and sell it today you would lose (188,961) from holding Dow Jones Industrial or give up 4.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Dow Jones Industrial vs. Lungyen Life Service
Performance |
| Timeline |
Dow Jones and Lungyen Life Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Lungyen Life Service
Pair trading matchups for Lungyen Life
Pair Trading with Dow Jones and Lungyen Life
The main advantage of trading using opposite Dow Jones and Lungyen Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Lungyen Life 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 Lungyen Life will offset losses from the drop in Lungyen Life's long position.| Dow Jones vs. Chipotle Mexican Grill | Dow Jones vs. Teleflex Incorporated | Dow Jones vs. Dine Brands Global | Dow Jones vs. Alvotech |
| Lungyen Life vs. Da Lue International | Lungyen Life vs. Foxconn Technology Co | Lungyen Life vs. Fubon Financial Holding | Lungyen Life vs. YuantaP shares Taiwan Top |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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