Correlation Between Dow Jones and A2 Milk
Can any of the company-specific risk be diversified away by investing in both Dow Jones and A2 Milk 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 A2 Milk 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 The a2 Milk, you can compare the effects of market volatilities on Dow Jones and A2 Milk 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 A2 Milk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and A2 Milk.
Diversification Opportunities for Dow Jones and A2 Milk
Very good diversification
The 3 months correlation between Dow and ACOPF is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and The a2 Milk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on a2 Milk 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 A2 Milk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of a2 Milk has no effect on the direction of Dow Jones i.e., Dow Jones and A2 Milk go up and down completely randomly.
Pair Corralation between Dow Jones and A2 Milk
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.61 times less return on investment than A2 Milk. But when comparing it to its historical volatility, Dow Jones Industrial is 8.24 times less risky than A2 Milk. It trades about 0.12 of its potential returns per unit of risk. The a2 Milk is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 381.00 in The a2 Milk on November 2, 2024 and sell it today you would lose (16.00) from holding The a2 Milk or give up 4.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.04% |
| Values | Daily Returns |
Dow Jones Industrial vs. The a2 Milk
Performance |
| Timeline |
Dow Jones and A2 Milk Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
The a2 Milk
Pair trading matchups for A2 Milk
Pair Trading with Dow Jones and A2 Milk
The main advantage of trading using opposite Dow Jones and A2 Milk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, A2 Milk 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 A2 Milk will offset losses from the drop in A2 Milk's long position.| Dow Jones vs. Boston Properties | Dow Jones vs. Suntory Beverage Food | Dow Jones vs. Envista Holdings Corp | Dow Jones vs. Fevertree Drinks Plc |
| A2 Milk vs. Artisan Consumer Goods | A2 Milk vs. Altavoz Entertainment | A2 Milk vs. Avi Ltd ADR | A2 Milk vs. Aryzta AG PK |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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