Correlation Between Dow Jones and BCM Resources
Can any of the company-specific risk be diversified away by investing in both Dow Jones and BCM Resources 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 BCM Resources 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 BCM Resources, you can compare the effects of market volatilities on Dow Jones and BCM Resources 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 BCM Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and BCM Resources.
Diversification Opportunities for Dow Jones and BCM Resources
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dow and BCM is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and BCM Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCM Resources 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 BCM Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCM Resources has no effect on the direction of Dow Jones i.e., Dow Jones and BCM Resources go up and down completely randomly.
Pair Corralation between Dow Jones and BCM Resources
Assuming the 90 days trading horizon Dow Jones is expected to generate 8.62 times less return on investment than BCM Resources. But when comparing it to its historical volatility, Dow Jones Industrial is 11.88 times less risky than BCM Resources. It trades about 0.37 of its potential returns per unit of risk. BCM Resources is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 2.00 in BCM Resources on September 1, 2024 and sell it today you would earn a total of 1.53 from holding BCM Resources or generate 76.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Dow Jones Industrial vs. BCM Resources
Performance |
| Timeline |
Dow Jones and BCM Resources Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
BCM Resources
Pair trading matchups for BCM Resources
Pair Trading with Dow Jones and BCM Resources
The main advantage of trading using opposite Dow Jones and BCM Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, BCM Resources 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 BCM Resources will offset losses from the drop in BCM Resources' long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| BCM Resources vs. Liontown Resources Limited | BCM Resources vs. ATT Inc | BCM Resources vs. Merck Company | BCM Resources vs. Walt Disney |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |