Correlation Between Dow Jones and Ligitek Electronics
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Ligitek Electronics 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 Ligitek Electronics 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 Ligitek Electronics Co, you can compare the effects of market volatilities on Dow Jones and Ligitek Electronics 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 Ligitek Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Ligitek Electronics.
Diversification Opportunities for Dow Jones and Ligitek Electronics
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dow and Ligitek is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Ligitek Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ligitek Electronics 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 Ligitek Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ligitek Electronics has no effect on the direction of Dow Jones i.e., Dow Jones and Ligitek Electronics go up and down completely randomly.
Pair Corralation between Dow Jones and Ligitek Electronics
Assuming the 90 days trading horizon Dow Jones is expected to generate 3.58 times less return on investment than Ligitek Electronics. But when comparing it to its historical volatility, Dow Jones Industrial is 4.9 times less risky than Ligitek Electronics. It trades about 0.16 of its potential returns per unit of risk. Ligitek Electronics Co is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,455 in Ligitek Electronics Co on September 1, 2024 and sell it today you would earn a total of 1,490 from holding Ligitek Electronics Co or generate 60.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Dow Jones Industrial vs. Ligitek Electronics Co
Performance |
| Timeline |
Dow Jones and Ligitek Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Ligitek Electronics Co
Pair trading matchups for Ligitek Electronics
Pair Trading with Dow Jones and Ligitek Electronics
The main advantage of trading using opposite Dow Jones and Ligitek Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Ligitek Electronics 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 Ligitek Electronics will offset losses from the drop in Ligitek Electronics' long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| Ligitek Electronics vs. Hon Hai Precision | Ligitek Electronics vs. Delta Electronics | Ligitek Electronics vs. LARGAN Precision Co | Ligitek Electronics vs. Yageo 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..
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |