Correlation Between Dow Jones and Abraxas Petroleum
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Abraxas Petroleum 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 Abraxas Petroleum 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 Abraxas Petroleum, you can compare the effects of market volatilities on Dow Jones and Abraxas Petroleum 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 Abraxas Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Abraxas Petroleum.
Diversification Opportunities for Dow Jones and Abraxas Petroleum
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Dow and Abraxas is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Abraxas Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abraxas Petroleum 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 Abraxas Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abraxas Petroleum has no effect on the direction of Dow Jones i.e., Dow Jones and Abraxas Petroleum go up and down completely randomly.
Pair Corralation between Dow Jones and Abraxas Petroleum
Assuming the 90 days trading horizon Dow Jones is expected to generate 42.39 times less return on investment than Abraxas Petroleum. But when comparing it to its historical volatility, Dow Jones Industrial is 46.71 times less risky than Abraxas Petroleum. It trades about 0.08 of its potential returns per unit of risk. Abraxas Petroleum is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 99.00 in Abraxas Petroleum on September 3, 2024 and sell it today you would lose (95.53) from holding Abraxas Petroleum or give up 96.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 26.67% |
| Values | Daily Returns |
Dow Jones Industrial vs. Abraxas Petroleum
Performance |
| Timeline |
Dow Jones and Abraxas Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Abraxas Petroleum
Pair trading matchups for Abraxas Petroleum
Pair Trading with Dow Jones and Abraxas Petroleum
The main advantage of trading using opposite Dow Jones and Abraxas Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Abraxas Petroleum 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 Abraxas Petroleum will offset losses from the drop in Abraxas Petroleum's long position.| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
| Abraxas Petroleum vs. Tullow Oil plc | Abraxas Petroleum vs. Rockhopper Exploration plc | Abraxas Petroleum vs. Civitas Resources | Abraxas Petroleum vs. Civitas Resources |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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