Correlation Between Dow Jones and BJC Heavy
Can any of the company-specific risk be diversified away by investing in both Dow Jones and BJC Heavy 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 BJC Heavy 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 BJC Heavy Industries, you can compare the effects of market volatilities on Dow Jones and BJC Heavy 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 BJC Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and BJC Heavy.
Diversification Opportunities for Dow Jones and BJC Heavy
Very good diversification
The 3 months correlation between Dow and BJC is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and BJC Heavy Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJC Heavy Industries 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 BJC Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BJC Heavy Industries has no effect on the direction of Dow Jones i.e., Dow Jones and BJC Heavy go up and down completely randomly.
Pair Corralation between Dow Jones and BJC Heavy
Assuming the 90 days trading horizon Dow Jones is expected to generate 29.96 times less return on investment than BJC Heavy. But when comparing it to its historical volatility, Dow Jones Industrial is 63.32 times less risky than BJC Heavy. It trades about 0.08 of its potential returns per unit of risk. BJC Heavy Industries is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 155.00 in BJC Heavy Industries on August 30, 2024 and sell it today you would lose (35.00) from holding BJC Heavy Industries or give up 22.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.17% |
| Values | Daily Returns |
Dow Jones Industrial vs. BJC Heavy Industries
Performance |
| Timeline |
Dow Jones and BJC Heavy Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
BJC Heavy Industries
Pair trading matchups for BJC Heavy
Pair Trading with Dow Jones and BJC Heavy
The main advantage of trading using opposite Dow Jones and BJC Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, BJC Heavy 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 BJC Heavy will offset losses from the drop in BJC Heavy's long position.| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
| BJC Heavy vs. CH Karnchang Public | BJC Heavy vs. Asia Aviation Public | BJC Heavy vs. AAPICO Hitech Public | BJC Heavy vs. GFPT 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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