Correlation Between Dow Jones and Pengxin International
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By analyzing existing cross correlation between Dow Jones Industrial and Pengxin International Mining, you can compare the effects of market volatilities on Dow Jones and Pengxin International 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 Pengxin International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Pengxin International.
Diversification Opportunities for Dow Jones and Pengxin International
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Pengxin is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Pengxin International Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pengxin International 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 Pengxin International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pengxin International has no effect on the direction of Dow Jones i.e., Dow Jones and Pengxin International go up and down completely randomly.
Pair Corralation between Dow Jones and Pengxin International
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.23 times more return on investment than Pengxin International. However, Dow Jones Industrial is 4.43 times less risky than Pengxin International. It trades about 0.12 of its potential returns per unit of risk. Pengxin International Mining is currently generating about 0.01 per unit of risk. If you would invest 3,383,361 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 1,107,704 from holding Dow Jones Industrial or generate 32.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.99% |
| Values | Daily Returns |
Dow Jones Industrial vs. Pengxin International Mining
Performance |
| Timeline |
Dow Jones and Pengxin International Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pengxin International Mining
Pair trading matchups for Pengxin International
Pair Trading with Dow Jones and Pengxin International
The main advantage of trading using opposite Dow Jones and Pengxin International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Pengxin International 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 Pengxin International will offset losses from the drop in Pengxin International's long position.| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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