Correlation Between Dow Jones and PChome Online
Can any of the company-specific risk be diversified away by investing in both Dow Jones and PChome Online 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 PChome Online 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 PChome Online, you can compare the effects of market volatilities on Dow Jones and PChome Online 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 PChome Online. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and PChome Online.
Diversification Opportunities for Dow Jones and PChome Online
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dow and PChome is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and PChome Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PChome Online 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 PChome Online. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PChome Online has no effect on the direction of Dow Jones i.e., Dow Jones and PChome Online go up and down completely randomly.
Pair Corralation between Dow Jones and PChome Online
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.3 times more return on investment than PChome Online. However, Dow Jones Industrial is 3.38 times less risky than PChome Online. It trades about 0.34 of its potential returns per unit of risk. PChome Online is currently generating about -0.05 per unit of risk. If you would invest 4,239,227 in Dow Jones Industrial on November 3, 2024 and sell it today you would earn a total of 215,239 from holding Dow Jones Industrial or generate 5.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 80.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. PChome Online
Performance |
| Timeline |
Dow Jones and PChome Online Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Dow Jones and PChome Online
The main advantage of trading using opposite Dow Jones and PChome Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, PChome Online 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 PChome Online will offset losses from the drop in PChome Online's long position.| Dow Jones vs. Cincinnati Financial | Dow Jones vs. Kellanova | Dow Jones vs. Acme United | Dow Jones vs. Procter Gamble |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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