Correlation Between Dow Jones and Acrex
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Acrex 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 Acrex 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 Acrex, you can compare the effects of market volatilities on Dow Jones and Acrex 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 Acrex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Acrex.
Diversification Opportunities for Dow Jones and Acrex
Excellent diversification
The 3 months correlation between Dow and Acrex is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Acrex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acrex 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 Acrex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acrex has no effect on the direction of Dow Jones i.e., Dow Jones and Acrex go up and down completely randomly.
Pair Corralation between Dow Jones and Acrex
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.69 times more return on investment than Acrex. However, Dow Jones Industrial is 1.45 times less risky than Acrex. It trades about 0.08 of its potential returns per unit of risk. Acrex is currently generating about -0.05 per unit of risk. If you would invest 3,351,765 in Dow Jones Industrial on September 28, 2024 and sell it today you would earn a total of 980,815 from holding Dow Jones Industrial or generate 29.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 38.31% |
| Values | Daily Returns |
Dow Jones Industrial vs. Acrex
Performance |
| Timeline |
Dow Jones and Acrex Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Acrex
Pair trading matchups for Acrex
Pair Trading with Dow Jones and Acrex
The main advantage of trading using opposite Dow Jones and Acrex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Acrex 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 Acrex will offset losses from the drop in Acrex's long position.| Dow Jones vs. Copa Holdings SA | Dow Jones vs. Delta Air Lines | Dow Jones vs. Azul SA | Dow Jones vs. SkyWest |
| Acrex vs. Lord Abbett Small | Acrex vs. Fidelity Small Cap | Acrex vs. Applied Finance Explorer | Acrex vs. Heartland Value Plus |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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