Correlation Between Dow Jones and AMREP
Can any of the company-specific risk be diversified away by investing in both Dow Jones and AMREP 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 AMREP 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 AMREP, you can compare the effects of market volatilities on Dow Jones and AMREP 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 AMREP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and AMREP.
Diversification Opportunities for Dow Jones and AMREP
Very poor diversification
The 3 months correlation between Dow and AMREP is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and AMREP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMREP 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 AMREP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMREP has no effect on the direction of Dow Jones i.e., Dow Jones and AMREP go up and down completely randomly.
Pair Corralation between Dow Jones and AMREP
Assuming the 90 days trading horizon Dow Jones is expected to generate 4.89 times less return on investment than AMREP. But when comparing it to its historical volatility, Dow Jones Industrial is 4.02 times less risky than AMREP. It trades about 0.08 of its potential returns per unit of risk. AMREP is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,111 in AMREP on August 27, 2024 and sell it today you would earn a total of 2,609 from holding AMREP or generate 234.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. AMREP
Performance |
| Timeline |
Dow Jones and AMREP Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
AMREP
Pair trading matchups for AMREP
Pair Trading with Dow Jones and AMREP
The main advantage of trading using opposite Dow Jones and AMREP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, AMREP 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 AMREP will offset losses from the drop in AMREP's long position.| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
| AMREP vs. Park Electrochemical | AMREP vs. Innovative Solutions and | AMREP vs. Curtiss Wright | AMREP vs. National Presto Industries |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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