Correlation Between Dow Jones and Ace Global
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Ace Global 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 Ace Global 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 Ace Global Business, you can compare the effects of market volatilities on Dow Jones and Ace Global 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 Ace Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Ace Global.
Diversification Opportunities for Dow Jones and Ace Global
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dow and Ace is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Ace Global Business in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ace Global Business 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 Ace Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ace Global Business has no effect on the direction of Dow Jones i.e., Dow Jones and Ace Global go up and down completely randomly.
Pair Corralation between Dow Jones and Ace Global
If you would invest 4,238,757 in Dow Jones Industrial on August 27, 2024 and sell it today you would earn a total of 190,894 from holding Dow Jones Industrial or generate 4.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 4.76% |
| Values | Daily Returns |
Dow Jones Industrial vs. Ace Global Business
Performance |
| Timeline |
Dow Jones and Ace Global Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Ace Global Business
Pair trading matchups for Ace Global
Pair Trading with Dow Jones and Ace Global
The main advantage of trading using opposite Dow Jones and Ace Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Ace Global 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 Ace Global will offset losses from the drop in Ace Global'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 |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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