Correlation Between Dow Jones and Black Spade
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Black Spade 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 Black Spade 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 Black Spade Acquisition, you can compare the effects of market volatilities on Dow Jones and Black Spade 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 Black Spade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Black Spade.
Diversification Opportunities for Dow Jones and Black Spade
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dow and Black is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Black Spade Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Spade Acquisition 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 Black Spade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Spade Acquisition has no effect on the direction of Dow Jones i.e., Dow Jones and Black Spade go up and down completely randomly.
Pair Corralation between Dow Jones and Black Spade
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 3.29 times more return on investment than Black Spade. However, Dow Jones is 3.29 times more volatile than Black Spade Acquisition. It trades about 0.07 of its potential returns per unit of risk. Black Spade Acquisition is currently generating about 0.07 per unit of risk. If you would invest 3,362,956 in Dow Jones Industrial on October 14, 2024 and sell it today you would earn a total of 830,889 from holding Dow Jones Industrial or generate 24.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 18.91% |
| Values | Daily Returns |
Dow Jones Industrial vs. Black Spade Acquisition
Performance |
| Timeline |
Dow Jones and Black Spade Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Black Spade Acquisition
Pair trading matchups for Black Spade
Pair Trading with Dow Jones and Black Spade
The main advantage of trading using opposite Dow Jones and Black Spade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Black Spade 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 Black Spade will offset losses from the drop in Black Spade's long position.| Dow Jones vs. Chipotle Mexican Grill | Dow Jones vs. Teleflex Incorporated | Dow Jones vs. Dine Brands Global | Dow Jones vs. Alvotech |
| Black Spade vs. Distoken Acquisition | Black Spade vs. Voyager Acquisition Corp | Black Spade vs. dMY Squared Technology | Black Spade vs. CO2 Energy Transition |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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