Correlation Between Dow Jones and Avenira
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Avenira 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 Avenira 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 Avenira, you can compare the effects of market volatilities on Dow Jones and Avenira 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 Avenira. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Avenira.
Diversification Opportunities for Dow Jones and Avenira
Very good diversification
The 3 months correlation between Dow and Avenira is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Avenira in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avenira 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 Avenira. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avenira has no effect on the direction of Dow Jones i.e., Dow Jones and Avenira go up and down completely randomly.
Pair Corralation between Dow Jones and Avenira
Assuming the 90 days trading horizon Dow Jones is expected to generate 3.72 times less return on investment than Avenira. But when comparing it to its historical volatility, Dow Jones Industrial is 11.58 times less risky than Avenira. It trades about 0.08 of its potential returns per unit of risk. Avenira is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1.80 in Avenira on September 14, 2024 and sell it today you would lose (0.80) from holding Avenira or give up 44.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Dow Jones Industrial vs. Avenira
Performance |
| Timeline |
Dow Jones and Avenira Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Avenira
Pair trading matchups for Avenira
Pair Trading with Dow Jones and Avenira
The main advantage of trading using opposite Dow Jones and Avenira positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Avenira 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 Avenira will offset losses from the drop in Avenira's long position.| Dow Jones vs. Hurco Companies | Dow Jones vs. Tyson Foods | Dow Jones vs. MYR Group | Dow Jones vs. Cannae Holdings |
| Avenira vs. Northern Star Resources | Avenira vs. Evolution Mining | Avenira vs. Bluescope Steel | Avenira vs. Sandfire Resources NL |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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