Correlation Between Dow Jones and RCE Capital
Can any of the company-specific risk be diversified away by investing in both Dow Jones and RCE Capital 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 RCE Capital 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 RCE Capital Berhad, you can compare the effects of market volatilities on Dow Jones and RCE Capital 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 RCE Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and RCE Capital.
Diversification Opportunities for Dow Jones and RCE Capital
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dow and RCE is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and RCE Capital Berhad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCE Capital Berhad 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 RCE Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCE Capital Berhad has no effect on the direction of Dow Jones i.e., Dow Jones and RCE Capital go up and down completely randomly.
Pair Corralation between Dow Jones and RCE Capital
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.95 times more return on investment than RCE Capital. However, Dow Jones Industrial is 1.06 times less risky than RCE Capital. It trades about 0.17 of its potential returns per unit of risk. RCE Capital Berhad is currently generating about -0.24 per unit of risk. If you would invest 4,290,695 in Dow Jones Industrial on October 23, 2024 and sell it today you would earn a total of 111,886 from holding Dow Jones Industrial or generate 2.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. RCE Capital Berhad
Performance |
| Timeline |
Dow Jones and RCE Capital Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
RCE Capital Berhad
Pair trading matchups for RCE Capital
Pair Trading with Dow Jones and RCE Capital
The main advantage of trading using opposite Dow Jones and RCE Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, RCE Capital 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 RCE Capital will offset losses from the drop in RCE Capital's long position.| Dow Jones vs. Grupo Televisa SAB | Dow Jones vs. NiSource | Dow Jones vs. Kinetik Holdings | Dow Jones vs. Empresa Distribuidora y |
| RCE Capital vs. Star Media Group | RCE Capital vs. Ho Hup Construction | RCE Capital vs. Apollo Food Holdings | RCE Capital vs. Southern Steel Bhd |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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