Correlation Between Dow Jones and Sierra Bancorp
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Sierra Bancorp 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 Sierra Bancorp 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 Sierra Bancorp, you can compare the effects of market volatilities on Dow Jones and Sierra Bancorp 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 Sierra Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Sierra Bancorp.
Diversification Opportunities for Dow Jones and Sierra Bancorp
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dow and Sierra is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Sierra Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sierra Bancorp 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 Sierra Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sierra Bancorp has no effect on the direction of Dow Jones i.e., Dow Jones and Sierra Bancorp go up and down completely randomly.
Pair Corralation between Dow Jones and Sierra Bancorp
Assuming the 90 days trading horizon Dow Jones is expected to generate 2.81 times less return on investment than Sierra Bancorp. But when comparing it to its historical volatility, Dow Jones Industrial is 4.84 times less risky than Sierra Bancorp. It trades about 0.22 of its potential returns per unit of risk. Sierra Bancorp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,915 in Sierra Bancorp on August 27, 2024 and sell it today you would earn a total of 324.00 from holding Sierra Bancorp or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Sierra Bancorp
Performance |
| Timeline |
Dow Jones and Sierra Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Sierra Bancorp
Pair trading matchups for Sierra Bancorp
Pair Trading with Dow Jones and Sierra Bancorp
The main advantage of trading using opposite Dow Jones and Sierra Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Sierra Bancorp 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 Sierra Bancorp will offset losses from the drop in Sierra Bancorp's long position.| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
| Sierra Bancorp vs. Home Federal Bancorp | Sierra Bancorp vs. First Financial Northwest | Sierra Bancorp vs. First Northwest Bancorp | Sierra Bancorp vs. First Capital |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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