Correlation Between Dow Jones and Sun Max
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Sun Max 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 Sun Max 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 Sun Max Tech, you can compare the effects of market volatilities on Dow Jones and Sun Max 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 Sun Max. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Sun Max.
Diversification Opportunities for Dow Jones and Sun Max
Very weak diversification
The 3 months correlation between Dow and Sun is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Sun Max Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Max Tech 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 Sun Max. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Max Tech has no effect on the direction of Dow Jones i.e., Dow Jones and Sun Max go up and down completely randomly.
Pair Corralation between Dow Jones and Sun Max
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.48 times less return on investment than Sun Max. But when comparing it to its historical volatility, Dow Jones Industrial is 2.84 times less risky than Sun Max. It trades about 0.08 of its potential returns per unit of risk. Sun Max Tech is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,932 in Sun Max Tech on August 26, 2024 and sell it today you would earn a total of 1,368 from holding Sun Max Tech or generate 34.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 96.78% |
| Values | Daily Returns |
Dow Jones Industrial vs. Sun Max Tech
Performance |
| Timeline |
Dow Jones and Sun Max Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Sun Max Tech
Pair trading matchups for Sun Max
Pair Trading with Dow Jones and Sun Max
The main advantage of trading using opposite Dow Jones and Sun Max positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Sun Max 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 Sun Max will offset losses from the drop in Sun Max's long position.| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
| Sun Max vs. Quanta Computer | Sun Max vs. Wiwynn Corp | Sun Max vs. Getac Technology Corp | Sun Max vs. IEI Integration 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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