Correlation Between Dow Jones and Abacus Life
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Abacus Life 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 Abacus Life 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 Abacus Life, you can compare the effects of market volatilities on Dow Jones and Abacus Life 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 Abacus Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Abacus Life.
Diversification Opportunities for Dow Jones and Abacus Life
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dow and Abacus is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Abacus Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abacus Life 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 Abacus Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abacus Life has no effect on the direction of Dow Jones i.e., Dow Jones and Abacus Life go up and down completely randomly.
Pair Corralation between Dow Jones and Abacus Life
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.15 times more return on investment than Abacus Life. However, Dow Jones Industrial is 6.56 times less risky than Abacus Life. It trades about 0.11 of its potential returns per unit of risk. Abacus Life is currently generating about 0.0 per unit of risk. If you would invest 3,356,286 in Dow Jones Industrial on August 27, 2024 and sell it today you would earn a total of 1,073,365 from holding Dow Jones Industrial or generate 31.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Abacus Life
Performance |
| Timeline |
Dow Jones and Abacus Life Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Abacus Life
Pair trading matchups for Abacus Life
Pair Trading with Dow Jones and Abacus Life
The main advantage of trading using opposite Dow Jones and Abacus Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Abacus Life 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 Abacus Life will offset losses from the drop in Abacus Life's long position.| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
| Abacus Life vs. FG Annuities Life | Abacus Life vs. Globe Life | Abacus Life vs. MetLife Preferred Stock | Abacus Life vs. MetLife Preferred Stock |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |