Correlation Between Dow Jones and Apexigen
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Apexigen 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 Apexigen 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 Apexigen, you can compare the effects of market volatilities on Dow Jones and Apexigen 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 Apexigen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Apexigen.
Diversification Opportunities for Dow Jones and Apexigen
Excellent diversification
The 3 months correlation between Dow and Apexigen is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Apexigen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apexigen 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 Apexigen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apexigen has no effect on the direction of Dow Jones i.e., Dow Jones and Apexigen go up and down completely randomly.
Pair Corralation between Dow Jones and Apexigen
Assuming the 90 days trading horizon Dow Jones is expected to generate 9.3 times less return on investment than Apexigen. But when comparing it to its historical volatility, Dow Jones Industrial is 26.21 times less risky than Apexigen. It trades about 0.08 of its potential returns per unit of risk. Apexigen is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 6.50 in Apexigen on September 3, 2024 and sell it today you would lose (4.97) from holding Apexigen or give up 76.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 30.91% |
| Values | Daily Returns |
Dow Jones Industrial vs. Apexigen
Performance |
| Timeline |
Dow Jones and Apexigen Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Apexigen
Pair trading matchups for Apexigen
Pair Trading with Dow Jones and Apexigen
The main advantage of trading using opposite Dow Jones and Apexigen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Apexigen 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 Apexigen will offset losses from the drop in Apexigen's long position.| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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