Correlation Between Dow Jones and Great Ajax
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Great Ajax 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 Great Ajax 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 Great Ajax Corp, you can compare the effects of market volatilities on Dow Jones and Great Ajax 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 Great Ajax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Great Ajax.
Diversification Opportunities for Dow Jones and Great Ajax
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Great is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Great Ajax Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Ajax 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 Great Ajax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Ajax Corp has no effect on the direction of Dow Jones i.e., Dow Jones and Great Ajax go up and down completely randomly.
Pair Corralation between Dow Jones and Great Ajax
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.26 times more return on investment than Great Ajax. However, Dow Jones Industrial is 3.83 times less risky than Great Ajax. It trades about 0.08 of its potential returns per unit of risk. Great Ajax Corp is currently generating about -0.04 per unit of risk. If you would invest 3,394,710 in Dow Jones Industrial on August 24, 2024 and sell it today you would earn a total of 1,034,941 from holding Dow Jones Industrial or generate 30.49% 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. Great Ajax Corp
Performance |
| Timeline |
Dow Jones and Great Ajax Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Great Ajax Corp
Pair trading matchups for Great Ajax
Pair Trading with Dow Jones and Great Ajax
The main advantage of trading using opposite Dow Jones and Great Ajax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Great Ajax 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 Great Ajax will offset losses from the drop in Great Ajax's long position.| Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. Titan Machinery | Dow Jones vs. Simon Property Group |
| Great Ajax vs. Ellington Financial | Great Ajax vs. Dynex Capital | Great Ajax vs. Ares Commercial Real | Great Ajax vs. Cherry Hill Mortgage |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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