Correlation Between Dow Jones and Big Camera
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Big Camera 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 Big Camera 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 Big Camera, you can compare the effects of market volatilities on Dow Jones and Big Camera 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 Big Camera. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Big Camera.
Diversification Opportunities for Dow Jones and Big Camera
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dow and Big is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Big Camera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Camera 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 Big Camera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Camera has no effect on the direction of Dow Jones i.e., Dow Jones and Big Camera go up and down completely randomly.
Pair Corralation between Dow Jones and Big Camera
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.3 times more return on investment than Big Camera. However, Dow Jones Industrial is 3.3 times less risky than Big Camera. It trades about 0.26 of its potential returns per unit of risk. Big Camera is currently generating about -0.19 per unit of risk. If you would invest 4,238,757 in Dow Jones Industrial on August 29, 2024 and sell it today you would earn a total of 247,274 from holding Dow Jones Industrial or generate 5.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Dow Jones Industrial vs. Big Camera
Performance |
| Timeline |
Dow Jones and Big Camera Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Big Camera
Pair trading matchups for Big Camera
Pair Trading with Dow Jones and Big Camera
The main advantage of trading using opposite Dow Jones and Big Camera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Big Camera 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 Big Camera will offset losses from the drop in Big Camera's long position.| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
| Big Camera vs. Ananda Development Public | Big Camera vs. Beauty Community Public | Big Camera vs. Asia Aviation Public | Big Camera vs. Gunkul Engineering Public |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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