Correlation Between Dow Jones and Blend Labs
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Blend Labs 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 Blend Labs 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 Blend Labs, you can compare the effects of market volatilities on Dow Jones and Blend Labs 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 Blend Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Blend Labs.
Diversification Opportunities for Dow Jones and Blend Labs
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Blend is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Blend Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blend Labs 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 Blend Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blend Labs has no effect on the direction of Dow Jones i.e., Dow Jones and Blend Labs go up and down completely randomly.
Pair Corralation between Dow Jones and Blend Labs
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.79 times more return on investment than Blend Labs. However, Dow Jones Industrial is 1.26 times less risky than Blend Labs. It trades about -0.02 of its potential returns per unit of risk. Blend Labs is currently generating about -0.17 per unit of risk. If you would invest 4,081,357 in Dow Jones Industrial on January 12, 2025 and sell it today you would lose (60,086) from holding Dow Jones Industrial or give up 1.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Blend Labs
Performance |
| Timeline |
Dow Jones and Blend Labs Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Blend Labs
Pair trading matchups for Blend Labs
Pair Trading with Dow Jones and Blend Labs
The main advantage of trading using opposite Dow Jones and Blend Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Blend Labs 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 Blend Labs will offset losses from the drop in Blend Labs' long position.| Dow Jones vs. Presidio Property Trust | Dow Jones vs. AG Mortgage Investment | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. NorthWestern |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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