Correlation Between Dow Jones and Aban Offshore
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Aban Offshore 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 Aban Offshore 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 Aban Offshore Limited, you can compare the effects of market volatilities on Dow Jones and Aban Offshore 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 Aban Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Aban Offshore.
Diversification Opportunities for Dow Jones and Aban Offshore
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Dow and Aban is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Aban Offshore Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aban Offshore Limited 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 Aban Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aban Offshore Limited has no effect on the direction of Dow Jones i.e., Dow Jones and Aban Offshore go up and down completely randomly.
Pair Corralation between Dow Jones and Aban Offshore
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.39 times more return on investment than Aban Offshore. However, Dow Jones Industrial is 2.59 times less risky than Aban Offshore. It trades about 0.29 of its potential returns per unit of risk. Aban Offshore Limited is currently generating about -0.04 per unit of risk. If you would invest 4,214,154 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 258,052 from holding Dow Jones Industrial or generate 6.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dow Jones Industrial vs. Aban Offshore Limited
Performance |
| Timeline |
Dow Jones and Aban Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Aban Offshore Limited
Pair trading matchups for Aban Offshore
Pair Trading with Dow Jones and Aban Offshore
The main advantage of trading using opposite Dow Jones and Aban Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Aban Offshore 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 Aban Offshore will offset losses from the drop in Aban Offshore's long position.| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
| Aban Offshore vs. Kingfa Science Technology | Aban Offshore vs. GTL Limited | Aban Offshore vs. Indo Amines Limited | Aban Offshore vs. HDFC Mutual Fund |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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