Correlation Between Dow Jones and Ave Maria
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Ave Maria 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 Ave Maria 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 Ave Maria Growth, you can compare the effects of market volatilities on Dow Jones and Ave Maria 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 Ave Maria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Ave Maria.
Diversification Opportunities for Dow Jones and Ave Maria
Very weak diversification
The 3 months correlation between Dow and Ave is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Ave Maria Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ave Maria Growth 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 Ave Maria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ave Maria Growth has no effect on the direction of Dow Jones i.e., Dow Jones and Ave Maria go up and down completely randomly.
Pair Corralation between Dow Jones and Ave Maria
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.5 times more return on investment than Ave Maria. However, Dow Jones Industrial is 2.01 times less risky than Ave Maria. It trades about -0.01 of its potential returns per unit of risk. Ave Maria Growth is currently generating about -0.13 per unit of risk. If you would invest 4,473,657 in Dow Jones Industrial on October 26, 2024 and sell it today you would lose (17,150) from holding Dow Jones Industrial or give up 0.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.5% |
| Values | Daily Returns |
Dow Jones Industrial vs. Ave Maria Growth
Performance |
| Timeline |
Dow Jones and Ave Maria Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Ave Maria Growth
Pair trading matchups for Ave Maria
Pair Trading with Dow Jones and Ave Maria
The main advantage of trading using opposite Dow Jones and Ave Maria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Ave Maria 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 Ave Maria will offset losses from the drop in Ave Maria's long position.| Dow Jones vs. Asure Software | Dow Jones vs. Amkor Technology | Dow Jones vs. Radcom | Dow Jones vs. Senmiao Technology |
| Ave Maria vs. Ave Maria Value | Ave Maria vs. Ave Maria Rising | Ave Maria vs. Ave Maria Bond | Ave Maria vs. Ave Maria World |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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