Correlation Between Dow Jones and Black Cat
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Black Cat 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 Black Cat 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 Black Cat Syndicate, you can compare the effects of market volatilities on Dow Jones and Black Cat 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 Black Cat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Black Cat.
Diversification Opportunities for Dow Jones and Black Cat
Very weak diversification
The 3 months correlation between Dow and Black is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Black Cat Syndicate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Cat Syndicate 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 Black Cat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Cat Syndicate has no effect on the direction of Dow Jones i.e., Dow Jones and Black Cat go up and down completely randomly.
Pair Corralation between Dow Jones and Black Cat
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the Black Cat. But the index apears to be less risky and, when comparing its historical volatility, Dow Jones Industrial is 5.54 times less risky than Black Cat. The index trades about -0.22 of its potential returns per unit of risk. The Black Cat Syndicate is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 67.00 in Black Cat Syndicate on November 27, 2024 and sell it today you would earn a total of 15.00 from holding Black Cat Syndicate or generate 22.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Black Cat Syndicate
Performance |
| Timeline |
Dow Jones and Black Cat Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Black Cat Syndicate
Pair trading matchups for Black Cat
Pair Trading with Dow Jones and Black Cat
The main advantage of trading using opposite Dow Jones and Black Cat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Black Cat 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 Black Cat will offset losses from the drop in Black Cat's long position.The idea behind Dow Jones Industrial and Black Cat Syndicate pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Black Cat vs. Centuria Industrial Reit | Black Cat vs. Falcon Metals | Black Cat vs. Stelar Metals | Black Cat vs. Flagship Investments |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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