Correlation Between Dow Jones and Anglo American
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Anglo American 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 Anglo American 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 Anglo American plc, you can compare the effects of market volatilities on Dow Jones and Anglo American 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 Anglo American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Anglo American.
Diversification Opportunities for Dow Jones and Anglo American
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dow and Anglo is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Anglo American plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anglo American plc 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 Anglo American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anglo American plc has no effect on the direction of Dow Jones i.e., Dow Jones and Anglo American go up and down completely randomly.
Pair Corralation between Dow Jones and Anglo American
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.28 times more return on investment than Anglo American. However, Dow Jones Industrial is 3.61 times less risky than Anglo American. It trades about 0.16 of its potential returns per unit of risk. Anglo American plc is currently generating about 0.0 per unit of risk. If you would invest 3,857,103 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 633,962 from holding Dow Jones Industrial or generate 16.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.41% |
| Values | Daily Returns |
Dow Jones Industrial vs. Anglo American plc
Performance |
| Timeline |
Dow Jones and Anglo American Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Anglo American plc
Pair trading matchups for Anglo American
Pair Trading with Dow Jones and Anglo American
The main advantage of trading using opposite Dow Jones and Anglo American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Anglo American 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 Anglo American will offset losses from the drop in Anglo American's long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| Anglo American vs. Glencore PLC ADR | Anglo American vs. Fortescue Metals Group | Anglo American vs. South32 Limited | Anglo American vs. South32 ADR |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |