Correlation Between Dow Jones and ATAI Life
Can any of the company-specific risk be diversified away by investing in both Dow Jones and ATAI Life 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 ATAI Life 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 ATAI Life Sciences, you can compare the effects of market volatilities on Dow Jones and ATAI Life 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 ATAI Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and ATAI Life.
Diversification Opportunities for Dow Jones and ATAI Life
Very weak diversification
The 3 months correlation between Dow and ATAI is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and ATAI Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATAI Life Sciences 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 ATAI Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATAI Life Sciences has no effect on the direction of Dow Jones i.e., Dow Jones and ATAI Life go up and down completely randomly.
Pair Corralation between Dow Jones and ATAI Life
Assuming the 90 days trading horizon Dow Jones is expected to generate 7.33 times less return on investment than ATAI Life. But when comparing it to its historical volatility, Dow Jones Industrial is 7.15 times less risky than ATAI Life. It trades about 0.37 of its potential returns per unit of risk. ATAI Life Sciences is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 106.00 in ATAI Life Sciences on September 1, 2024 and sell it today you would earn a total of 67.00 from holding ATAI Life Sciences or generate 63.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. ATAI Life Sciences
Performance |
| Timeline |
Dow Jones and ATAI Life Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
ATAI Life Sciences
Pair trading matchups for ATAI Life
Pair Trading with Dow Jones and ATAI Life
The main advantage of trading using opposite Dow Jones and ATAI Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, ATAI Life 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 ATAI Life will offset losses from the drop in ATAI Life's long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| ATAI Life vs. Mind Medicine | ATAI Life vs. Seelos Therapeutics | ATAI Life vs. GH Research PLC | ATAI Life vs. Cybin Inc |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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