Correlation Between Dow Jones and AbraSilver Resource
Can any of the company-specific risk be diversified away by investing in both Dow Jones and AbraSilver Resource 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 AbraSilver Resource 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 AbraSilver Resource Corp, you can compare the effects of market volatilities on Dow Jones and AbraSilver Resource 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 AbraSilver Resource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and AbraSilver Resource.
Diversification Opportunities for Dow Jones and AbraSilver Resource
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dow and AbraSilver is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and AbraSilver Resource Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AbraSilver Resource Corp 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 AbraSilver Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AbraSilver Resource Corp has no effect on the direction of Dow Jones i.e., Dow Jones and AbraSilver Resource go up and down completely randomly.
Pair Corralation between Dow Jones and AbraSilver Resource
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.46 times less return on investment than AbraSilver Resource. But when comparing it to its historical volatility, Dow Jones Industrial is 5.0 times less risky than AbraSilver Resource. It trades about 0.16 of its potential returns per unit of risk. AbraSilver Resource Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 171.00 in AbraSilver Resource Corp on September 1, 2024 and sell it today you would earn a total of 25.00 from holding AbraSilver Resource Corp or generate 14.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. AbraSilver Resource Corp
Performance |
| Timeline |
Dow Jones and AbraSilver Resource Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
AbraSilver Resource Corp
Pair trading matchups for AbraSilver Resource
Pair Trading with Dow Jones and AbraSilver Resource
The main advantage of trading using opposite Dow Jones and AbraSilver Resource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, AbraSilver Resource 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 AbraSilver Resource will offset losses from the drop in AbraSilver Resource's long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| AbraSilver Resource vs. Defiance Silver Corp | AbraSilver Resource vs. HUMANA INC | AbraSilver Resource vs. SCOR PK | AbraSilver Resource vs. Aquagold International |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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