Correlation Between Dow Jones and EVS Broadcast
Can any of the company-specific risk be diversified away by investing in both Dow Jones and EVS Broadcast 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 EVS Broadcast 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 EVS Broadcast Equipment, you can compare the effects of market volatilities on Dow Jones and EVS Broadcast 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 EVS Broadcast. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and EVS Broadcast.
Diversification Opportunities for Dow Jones and EVS Broadcast
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and EVS is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and EVS Broadcast Equipment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EVS Broadcast Equipment 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 EVS Broadcast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EVS Broadcast Equipment has no effect on the direction of Dow Jones i.e., Dow Jones and EVS Broadcast go up and down completely randomly.
Pair Corralation between Dow Jones and EVS Broadcast
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.65 times less return on investment than EVS Broadcast. But when comparing it to its historical volatility, Dow Jones Industrial is 2.2 times less risky than EVS Broadcast. It trades about 0.08 of its potential returns per unit of risk. EVS Broadcast Equipment is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,969 in EVS Broadcast Equipment on November 1, 2024 and sell it today you would earn a total of 1,036 from holding EVS Broadcast Equipment or generate 52.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.8% |
| Values | Daily Returns |
Dow Jones Industrial vs. EVS Broadcast Equipment
Performance |
| Timeline |
Dow Jones and EVS Broadcast Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
EVS Broadcast Equipment
Pair trading matchups for EVS Broadcast
Pair Trading with Dow Jones and EVS Broadcast
The main advantage of trading using opposite Dow Jones and EVS Broadcast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, EVS Broadcast 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 EVS Broadcast will offset losses from the drop in EVS Broadcast's long position.| Dow Jones vs. WEC Energy Group | Dow Jones vs. Pure Cycle | Dow Jones vs. Tandy Leather Factory | Dow Jones vs. Tapestry |
| EVS Broadcast vs. Suntory Beverage Food | EVS Broadcast vs. The Boston Beer | EVS Broadcast vs. Prosiebensat 1 Media | EVS Broadcast vs. MOLSON RS BEVERAGE |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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