Correlation Between Dow Jones and Ahren Acquisition
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Ahren Acquisition 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 Ahren Acquisition 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 Ahren Acquisition Corp, you can compare the effects of market volatilities on Dow Jones and Ahren Acquisition 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 Ahren Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Ahren Acquisition.
Diversification Opportunities for Dow Jones and Ahren Acquisition
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Ahren is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Ahren Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ahren Acquisition 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 Ahren Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ahren Acquisition Corp has no effect on the direction of Dow Jones i.e., Dow Jones and Ahren Acquisition go up and down completely randomly.
Pair Corralation between Dow Jones and Ahren Acquisition
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 8.5 times more return on investment than Ahren Acquisition. However, Dow Jones is 8.5 times more volatile than Ahren Acquisition Corp. It trades about 0.08 of its potential returns per unit of risk. Ahren Acquisition Corp is currently generating about 0.26 per unit of risk. If you would invest 3,347,646 in Dow Jones Industrial on August 30, 2024 and sell it today you would earn a total of 1,124,560 from holding Dow Jones Industrial or generate 33.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 26.46% |
| Values | Daily Returns |
Dow Jones Industrial vs. Ahren Acquisition Corp
Performance |
| Timeline |
Dow Jones and Ahren Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Ahren Acquisition Corp
Pair trading matchups for Ahren Acquisition
Pair Trading with Dow Jones and Ahren Acquisition
The main advantage of trading using opposite Dow Jones and Ahren Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Ahren Acquisition 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 Ahren Acquisition will offset losses from the drop in Ahren Acquisition's long position.| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
| Ahren Acquisition vs. Manaris Corp | Ahren Acquisition vs. Alpha Star Acquisition | Ahren Acquisition vs. Alpha One | Ahren Acquisition vs. Athena Technology Acquisition |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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