Correlation Between Dow Jones and Aquestive Therapeutics
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Aquestive Therapeutics 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 Aquestive Therapeutics 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 Aquestive Therapeutics, you can compare the effects of market volatilities on Dow Jones and Aquestive Therapeutics 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 Aquestive Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Aquestive Therapeutics.
Diversification Opportunities for Dow Jones and Aquestive Therapeutics
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dow and Aquestive is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Aquestive Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquestive Therapeutics 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 Aquestive Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquestive Therapeutics has no effect on the direction of Dow Jones i.e., Dow Jones and Aquestive Therapeutics go up and down completely randomly.
Pair Corralation between Dow Jones and Aquestive Therapeutics
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.22 times more return on investment than Aquestive Therapeutics. However, Dow Jones Industrial is 4.53 times less risky than Aquestive Therapeutics. It trades about 0.26 of its potential returns per unit of risk. Aquestive Therapeutics is currently generating about -0.12 per unit of risk. If you would invest 4,238,757 in Dow Jones Industrial on August 27, 2024 and sell it today you would earn a total of 234,900 from holding Dow Jones Industrial or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Aquestive Therapeutics
Performance |
| Timeline |
Dow Jones and Aquestive Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Aquestive Therapeutics
Pair trading matchups for Aquestive Therapeutics
Pair Trading with Dow Jones and Aquestive Therapeutics
The main advantage of trading using opposite Dow Jones and Aquestive Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Aquestive Therapeutics 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 Aquestive Therapeutics will offset losses from the drop in Aquestive Therapeutics' long position.| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
| Aquestive Therapeutics vs. Capricor Therapeutics | Aquestive Therapeutics vs. Soleno Therapeutics | Aquestive Therapeutics vs. Bio Path Holdings | Aquestive Therapeutics vs. Moleculin Biotech |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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