Correlation Between Dow Jones and AdvanSix
Can any of the company-specific risk be diversified away by investing in both Dow Jones and AdvanSix 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 AdvanSix 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 AdvanSix, you can compare the effects of market volatilities on Dow Jones and AdvanSix 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 AdvanSix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and AdvanSix.
Diversification Opportunities for Dow Jones and AdvanSix
Almost no diversification
The 3 months correlation between Dow and AdvanSix is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and AdvanSix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvanSix 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 AdvanSix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvanSix has no effect on the direction of Dow Jones i.e., Dow Jones and AdvanSix go up and down completely randomly.
Pair Corralation between Dow Jones and AdvanSix
Assuming the 90 days trading horizon Dow Jones is expected to generate 81.0 times less return on investment than AdvanSix. But when comparing it to its historical volatility, Dow Jones Industrial is 3.68 times less risky than AdvanSix. It trades about 0.0 of its potential returns per unit of risk. AdvanSix is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,880 in AdvanSix on September 13, 2024 and sell it today you would earn a total of 80.00 from holding AdvanSix or generate 2.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Dow Jones Industrial vs. AdvanSix
Performance |
| Timeline |
Dow Jones and AdvanSix Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
AdvanSix
Pair trading matchups for AdvanSix
Pair Trading with Dow Jones and AdvanSix
The main advantage of trading using opposite Dow Jones and AdvanSix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, AdvanSix 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 AdvanSix will offset losses from the drop in AdvanSix's long position.| Dow Jones vs. Hurco Companies | Dow Jones vs. Tyson Foods | Dow Jones vs. MYR Group | Dow Jones vs. Cannae Holdings |
| AdvanSix vs. AGF Management Limited | AdvanSix vs. Platinum Investment Management | AdvanSix vs. MARKET VECTR RETAIL | AdvanSix vs. Ross Stores |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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