Correlation Between Dow Jones and BH Macro
Can any of the company-specific risk be diversified away by investing in both Dow Jones and BH Macro 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 BH Macro 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 BH Macro Limited, you can compare the effects of market volatilities on Dow Jones and BH Macro 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 BH Macro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and BH Macro.
Diversification Opportunities for Dow Jones and BH Macro
Poor diversification
The 3 months correlation between Dow and BHMG is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and BH Macro Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BH Macro Limited 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 BH Macro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BH Macro Limited has no effect on the direction of Dow Jones i.e., Dow Jones and BH Macro go up and down completely randomly.
Pair Corralation between Dow Jones and BH Macro
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.63 times more return on investment than BH Macro. However, Dow Jones Industrial is 1.58 times less risky than BH Macro. It trades about 0.16 of its potential returns per unit of risk. BH Macro Limited is currently generating about 0.08 per unit of risk. If you would invest 3,857,103 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 633,962 from holding Dow Jones Industrial or generate 16.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.92% |
| Values | Daily Returns |
Dow Jones Industrial vs. BH Macro Limited
Performance |
| Timeline |
Dow Jones and BH Macro Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
BH Macro Limited
Pair trading matchups for BH Macro
Pair Trading with Dow Jones and BH Macro
The main advantage of trading using opposite Dow Jones and BH Macro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, BH Macro 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 BH Macro will offset losses from the drop in BH Macro's long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| BH Macro vs. Toyota Motor Corp | BH Macro vs. SoftBank Group Corp | BH Macro vs. OTP Bank Nyrt | BH Macro vs. Las Vegas Sands |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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