Correlation Between Dow Jones and Amedeo Air
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Amedeo Air 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 Amedeo Air 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 Amedeo Air Four, you can compare the effects of market volatilities on Dow Jones and Amedeo Air 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 Amedeo Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Amedeo Air.
Diversification Opportunities for Dow Jones and Amedeo Air
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Amedeo is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Amedeo Air Four in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amedeo Air Four 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 Amedeo Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amedeo Air Four has no effect on the direction of Dow Jones i.e., Dow Jones and Amedeo Air go up and down completely randomly.
Pair Corralation between Dow Jones and Amedeo Air
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.47 times more return on investment than Amedeo Air. However, Dow Jones is 1.47 times more volatile than Amedeo Air Four. It trades about 0.37 of its potential returns per unit of risk. Amedeo Air Four is currently generating about 0.51 per unit of risk. If you would invest 4,176,346 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 314,719 from holding Dow Jones Industrial or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dow Jones Industrial vs. Amedeo Air Four
Performance |
| Timeline |
Dow Jones and Amedeo Air Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Amedeo Air Four
Pair trading matchups for Amedeo Air
Pair Trading with Dow Jones and Amedeo Air
The main advantage of trading using opposite Dow Jones and Amedeo Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Amedeo Air 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 Amedeo Air will offset losses from the drop in Amedeo Air's long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| Amedeo Air vs. Samsung Electronics Co | Amedeo Air vs. Samsung Electronics Co | Amedeo Air vs. Hyundai Motor | Amedeo Air vs. Toyota Motor 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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