Correlation Between Dow Jones and Aequus Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Aequus Pharmaceuticals 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 Aequus Pharmaceuticals 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 Aequus Pharmaceuticals, you can compare the effects of market volatilities on Dow Jones and Aequus Pharmaceuticals 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 Aequus Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Aequus Pharmaceuticals.
Diversification Opportunities for Dow Jones and Aequus Pharmaceuticals
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Dow and Aequus is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Aequus Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aequus Pharmaceuticals 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 Aequus Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aequus Pharmaceuticals has no effect on the direction of Dow Jones i.e., Dow Jones and Aequus Pharmaceuticals go up and down completely randomly.
Pair Corralation between Dow Jones and Aequus Pharmaceuticals
Assuming the 90 days trading horizon Dow Jones is expected to generate 2.89 times less return on investment than Aequus Pharmaceuticals. But when comparing it to its historical volatility, Dow Jones Industrial is 13.15 times less risky than Aequus Pharmaceuticals. It trades about 0.08 of its potential returns per unit of risk. Aequus Pharmaceuticals is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2.47 in Aequus Pharmaceuticals on August 29, 2024 and sell it today you would lose (1.81) from holding Aequus Pharmaceuticals or give up 73.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Aequus Pharmaceuticals
Performance |
| Timeline |
Dow Jones and Aequus Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Aequus Pharmaceuticals
Pair trading matchups for Aequus Pharmaceuticals
Pair Trading with Dow Jones and Aequus Pharmaceuticals
The main advantage of trading using opposite Dow Jones and Aequus Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Aequus Pharmaceuticals 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 Aequus Pharmaceuticals will offset losses from the drop in Aequus Pharmaceuticals' long position.| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
| Aequus Pharmaceuticals vs. PayPal Holdings | Aequus Pharmaceuticals vs. Nasdaq Inc | Aequus Pharmaceuticals vs. Choice Hotels International | Aequus Pharmaceuticals vs. Microsoft |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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