Correlation Between Dow Jones and Acacia Research
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Acacia Research 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 Acacia Research 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 Acacia Research, you can compare the effects of market volatilities on Dow Jones and Acacia Research 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 Acacia Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Acacia Research.
Diversification Opportunities for Dow Jones and Acacia Research
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Acacia is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Acacia Research in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acacia Research 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 Acacia Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acacia Research has no effect on the direction of Dow Jones i.e., Dow Jones and Acacia Research go up and down completely randomly.
Pair Corralation between Dow Jones and Acacia Research
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.3 times less return on investment than Acacia Research. But when comparing it to its historical volatility, Dow Jones Industrial is 3.25 times less risky than Acacia Research. It trades about 0.11 of its potential returns per unit of risk. Acacia Research is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 391.00 in Acacia Research on August 28, 2024 and sell it today you would earn a total of 67.00 from holding Acacia Research or generate 17.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Acacia Research
Performance |
| Timeline |
Dow Jones and Acacia Research Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Acacia Research
Pair trading matchups for Acacia Research
Pair Trading with Dow Jones and Acacia Research
The main advantage of trading using opposite Dow Jones and Acacia Research positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Acacia Research 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 Acacia Research will offset losses from the drop in Acacia Research's long position.| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
| Acacia Research vs. Ennis Inc | Acacia Research vs. HNI Corp | Acacia Research vs. Steelcase | Acacia Research vs. Acco Brands |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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