Correlation Between Dow Jones and Alpha Star
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Alpha Star 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 Alpha Star 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 Alpha Star Acquisition, you can compare the effects of market volatilities on Dow Jones and Alpha Star 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 Alpha Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Alpha Star.
Diversification Opportunities for Dow Jones and Alpha Star
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and Alpha is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Alpha Star Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Star Acquisition 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 Alpha Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Star Acquisition has no effect on the direction of Dow Jones i.e., Dow Jones and Alpha Star go up and down completely randomly.
Pair Corralation between Dow Jones and Alpha Star
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.64 times more return on investment than Alpha Star. However, Dow Jones Industrial is 1.56 times less risky than Alpha Star. It trades about 0.08 of its potential returns per unit of risk. Alpha Star Acquisition is currently generating about 0.03 per unit of risk. If you would invest 3,359,634 in Dow Jones Industrial on August 27, 2024 and sell it today you would earn a total of 1,070,017 from holding Dow Jones Industrial or generate 31.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.53% |
| Values | Daily Returns |
Dow Jones Industrial vs. Alpha Star Acquisition
Performance |
| Timeline |
Dow Jones and Alpha Star Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Alpha Star Acquisition
Pair trading matchups for Alpha Star
Pair Trading with Dow Jones and Alpha Star
The main advantage of trading using opposite Dow Jones and Alpha Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Alpha Star 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 Alpha Star will offset losses from the drop in Alpha Star's long position.| Dow Jones vs. MI Homes | Dow Jones vs. Franklin Street Properties | Dow Jones vs. Summit Hotel Properties | Dow Jones vs. Portillos |
| Alpha Star vs. PowerUp Acquisition Corp | Alpha Star vs. Aurora Innovation | Alpha Star vs. HUMANA INC | Alpha Star vs. Aquagold International |
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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