Correlation Between Dow Jones and Affiliated Resources
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Affiliated Resources 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 Affiliated Resources 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 Affiliated Resources Corp, you can compare the effects of market volatilities on Dow Jones and Affiliated Resources 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 Affiliated Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Affiliated Resources.
Diversification Opportunities for Dow Jones and Affiliated Resources
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dow and Affiliated is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Affiliated Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affiliated Resources Corp 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 Affiliated Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affiliated Resources Corp has no effect on the direction of Dow Jones i.e., Dow Jones and Affiliated Resources go up and down completely randomly.
Pair Corralation between Dow Jones and Affiliated Resources
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.24 times more return on investment than Affiliated Resources. However, Dow Jones Industrial is 4.2 times less risky than Affiliated Resources. It trades about 0.29 of its potential returns per unit of risk. Affiliated Resources Corp is currently generating about -0.07 per unit of risk. If you would invest 4,214,154 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 258,052 from holding Dow Jones Industrial or generate 6.12% 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. Affiliated Resources Corp
Performance |
| Timeline |
Dow Jones and Affiliated Resources Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Affiliated Resources Corp
Pair trading matchups for Affiliated Resources
Pair Trading with Dow Jones and Affiliated Resources
The main advantage of trading using opposite Dow Jones and Affiliated Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Affiliated Resources 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 Affiliated Resources will offset losses from the drop in Affiliated Resources' long position.| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
| Affiliated Resources vs. BRP Inc | Affiliated Resources vs. Arrow Electronics | Affiliated Resources vs. Playtika Holding Corp | Affiliated Resources vs. Playa Hotels Resorts |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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