Correlation Between Dow Jones and Armada Mercantile
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Armada Mercantile 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 Armada Mercantile 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 Armada Mercantile, you can compare the effects of market volatilities on Dow Jones and Armada Mercantile 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 Armada Mercantile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Armada Mercantile.
Diversification Opportunities for Dow Jones and Armada Mercantile
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dow and Armada is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Armada Mercantile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armada Mercantile 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 Armada Mercantile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armada Mercantile has no effect on the direction of Dow Jones i.e., Dow Jones and Armada Mercantile go up and down completely randomly.
Pair Corralation between Dow Jones and Armada Mercantile
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.16 times more return on investment than Armada Mercantile. However, Dow Jones Industrial is 6.25 times less risky than Armada Mercantile. It trades about 0.21 of its potential returns per unit of risk. Armada Mercantile is currently generating about 0.0 per unit of risk. If you would invest 4,237,436 in Dow Jones Industrial on August 25, 2024 and sell it today you would earn a total of 192,215 from holding Dow Jones Industrial or generate 4.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Armada Mercantile
Performance |
| Timeline |
Dow Jones and Armada Mercantile Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Armada Mercantile
Pair trading matchups for Armada Mercantile
Pair Trading with Dow Jones and Armada Mercantile
The main advantage of trading using opposite Dow Jones and Armada Mercantile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Armada Mercantile 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 Armada Mercantile will offset losses from the drop in Armada Mercantile's long position.| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
| Armada Mercantile vs. SPENN Technology AS | Armada Mercantile vs. Arcane Crypto AB | Armada Mercantile vs. OFX Group Ltd | Armada Mercantile vs. Blockmate Ventures |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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