Correlation Between Dow Jones and Aluar Aluminio
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Aluar Aluminio 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 Aluar Aluminio 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 Aluar Aluminio Argentino, you can compare the effects of market volatilities on Dow Jones and Aluar Aluminio 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 Aluar Aluminio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Aluar Aluminio.
Diversification Opportunities for Dow Jones and Aluar Aluminio
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and Aluar is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Aluar Aluminio Argentino in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aluar Aluminio Argentino 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 Aluar Aluminio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aluar Aluminio Argentino has no effect on the direction of Dow Jones i.e., Dow Jones and Aluar Aluminio go up and down completely randomly.
Pair Corralation between Dow Jones and Aluar Aluminio
Assuming the 90 days trading horizon Dow Jones is expected to generate 2.35 times less return on investment than Aluar Aluminio. But when comparing it to its historical volatility, Dow Jones Industrial is 2.96 times less risky than Aluar Aluminio. It trades about 0.27 of its potential returns per unit of risk. Aluar Aluminio Argentino is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 83,200 in Aluar Aluminio Argentino on August 30, 2024 and sell it today you would earn a total of 10,800 from holding Aluar Aluminio Argentino or generate 12.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dow Jones Industrial vs. Aluar Aluminio Argentino
Performance |
| Timeline |
Dow Jones and Aluar Aluminio Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Aluar Aluminio Argentino
Pair trading matchups for Aluar Aluminio
Pair Trading with Dow Jones and Aluar Aluminio
The main advantage of trading using opposite Dow Jones and Aluar Aluminio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Aluar Aluminio 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 Aluar Aluminio will offset losses from the drop in Aluar Aluminio's long position.| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
| Aluar Aluminio vs. Telecom Argentina | Aluar Aluminio vs. Compania de Transporte | Aluar Aluminio vs. Agrometal SAI | Aluar Aluminio vs. Harmony Gold Mining |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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