Correlation Between Dow Jones and America Movil
Can any of the company-specific risk be diversified away by investing in both Dow Jones and America Movil 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 America Movil 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 Amex Exploration, you can compare the effects of market volatilities on Dow Jones and America Movil 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 America Movil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and America Movil.
Diversification Opportunities for Dow Jones and America Movil
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and America is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Amex Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amex Exploration 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 America Movil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amex Exploration has no effect on the direction of Dow Jones i.e., Dow Jones and America Movil go up and down completely randomly.
Pair Corralation between Dow Jones and America Movil
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.33 times more return on investment than America Movil. However, Dow Jones Industrial is 3.05 times less risky than America Movil. It trades about -0.25 of its potential returns per unit of risk. Amex Exploration is currently generating about -0.09 per unit of risk. If you would invest 4,485,035 in Dow Jones Industrial on November 29, 2024 and sell it today you would lose (141,723) from holding Dow Jones Industrial or give up 3.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Amex Exploration
Performance |
| Timeline |
Dow Jones and America Movil Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Amex Exploration
Pair trading matchups for America Movil
Pair Trading with Dow Jones and America Movil
The main advantage of trading using opposite Dow Jones and America Movil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, America Movil 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 America Movil will offset losses from the drop in America Movil's long position.| Dow Jones vs. Starbucks | Dow Jones vs. Westinghouse Air Brake | Dow Jones vs. Finnair Oyj | Dow Jones vs. Mesa Air Group |
| America Movil vs. Starr Peak Exploration | America Movil vs. Lion One Metals | America Movil vs. Brixton Metals |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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