Correlation Between Dow Jones and APx Acquisition
Can any of the company-specific risk be diversified away by investing in both Dow Jones and APx Acquisition 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 APx Acquisition 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 APx Acquisition I, you can compare the effects of market volatilities on Dow Jones and APx Acquisition 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 APx Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and APx Acquisition.
Diversification Opportunities for Dow Jones and APx Acquisition
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and APx is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and APx Acquisition I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APx Acquisition I 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 APx Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APx Acquisition I has no effect on the direction of Dow Jones i.e., Dow Jones and APx Acquisition go up and down completely randomly.
Pair Corralation between Dow Jones and APx Acquisition
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the APx Acquisition. But the index apears to be less risky and, when comparing its historical volatility, Dow Jones Industrial is 2.01 times less risky than APx Acquisition. The index trades about -0.01 of its potential returns per unit of risk. The APx Acquisition I is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,185 in APx Acquisition I on September 12, 2024 and sell it today you would earn a total of 3.00 from holding APx Acquisition I or generate 0.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dow Jones Industrial vs. APx Acquisition I
Performance |
| Timeline |
Dow Jones and APx Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
APx Acquisition I
Pair trading matchups for APx Acquisition
Pair Trading with Dow Jones and APx Acquisition
The main advantage of trading using opposite Dow Jones and APx Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, APx Acquisition 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 APx Acquisition will offset losses from the drop in APx Acquisition's long position.| Dow Jones vs. Aeye Inc | Dow Jones vs. Gentex | Dow Jones vs. Marine Products | Dow Jones vs. CarsalesCom Ltd ADR |
| APx Acquisition vs. HUMANA INC | APx Acquisition vs. Barloworld Ltd ADR | APx Acquisition vs. Morningstar Unconstrained Allocation | APx Acquisition vs. Thrivent High Yield |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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