Correlation Between Dow Jones and Bald Eagle
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Bald Eagle 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 Bald Eagle 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 Bald Eagle Gold, you can compare the effects of market volatilities on Dow Jones and Bald Eagle 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 Bald Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Bald Eagle.
Diversification Opportunities for Dow Jones and Bald Eagle
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dow and Bald is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Bald Eagle Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bald Eagle Gold 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 Bald Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bald Eagle Gold has no effect on the direction of Dow Jones i.e., Dow Jones and Bald Eagle go up and down completely randomly.
Pair Corralation between Dow Jones and Bald Eagle
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.26 times more return on investment than Bald Eagle. However, Dow Jones Industrial is 3.82 times less risky than Bald Eagle. It trades about 0.33 of its potential returns per unit of risk. Bald Eagle Gold is currently generating about 0.01 per unit of risk. If you would invest 4,263,520 in Dow Jones Industrial on November 9, 2024 and sell it today you would earn a total of 211,243 from holding Dow Jones Industrial or generate 4.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Dow Jones Industrial vs. Bald Eagle Gold
Performance |
| Timeline |
Dow Jones and Bald Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Bald Eagle Gold
Pair trading matchups for Bald Eagle
Pair Trading with Dow Jones and Bald Eagle
The main advantage of trading using opposite Dow Jones and Bald Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Bald Eagle 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 Bald Eagle will offset losses from the drop in Bald Eagle's long position.| Dow Jones vs. Douglas Emmett | Dow Jones vs. Todos Medical | Dow Jones vs. Eastern Co | Dow Jones vs. Merit Medical Systems |
| Bald Eagle vs. Andean Precious Metals | Bald Eagle vs. Apollo Silver Corp | Bald Eagle vs. Silver Hammer Mining | Bald Eagle vs. Guanajuato Silver |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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