Correlation Between Dow Jones and Atlas Lithium
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Atlas Lithium 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 Atlas Lithium 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 Atlas Lithium, you can compare the effects of market volatilities on Dow Jones and Atlas Lithium 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 Atlas Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Atlas Lithium.
Diversification Opportunities for Dow Jones and Atlas Lithium
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Atlas is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Atlas Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Lithium 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 Atlas Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Lithium has no effect on the direction of Dow Jones i.e., Dow Jones and Atlas Lithium go up and down completely randomly.
Pair Corralation between Dow Jones and Atlas Lithium
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.19 times more return on investment than Atlas Lithium. However, Dow Jones Industrial is 5.37 times less risky than Atlas Lithium. It trades about 0.37 of its potential returns per unit of risk. Atlas Lithium is currently generating about 0.01 per unit of risk. If you would invest 4,254,422 in Dow Jones Industrial on November 1, 2024 and sell it today you would earn a total of 233,791 from holding Dow Jones Industrial or generate 5.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Atlas Lithium
Performance |
| Timeline |
Dow Jones and Atlas Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Atlas Lithium
Pair trading matchups for Atlas Lithium
Pair Trading with Dow Jones and Atlas Lithium
The main advantage of trading using opposite Dow Jones and Atlas Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Atlas Lithium 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 Atlas Lithium will offset losses from the drop in Atlas Lithium's long position.| Dow Jones vs. WEC Energy Group | Dow Jones vs. Pure Cycle | Dow Jones vs. Tandy Leather Factory | Dow Jones vs. Tapestry |
| Atlas Lithium vs. SilverCrest Metals | Atlas Lithium vs. New Pacific Metals | Atlas Lithium vs. Endeavour Silver Corp | Atlas Lithium vs. McEwen Mining |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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