Correlation Between Dow Jones and BTC Health
Can any of the company-specific risk be diversified away by investing in both Dow Jones and BTC Health 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 BTC Health 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 BTC Health Limited, you can compare the effects of market volatilities on Dow Jones and BTC Health 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 BTC Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and BTC Health.
Diversification Opportunities for Dow Jones and BTC Health
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and BTC is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and BTC Health Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTC Health Limited 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 BTC Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTC Health Limited has no effect on the direction of Dow Jones i.e., Dow Jones and BTC Health go up and down completely randomly.
Pair Corralation between Dow Jones and BTC Health
Assuming the 90 days trading horizon Dow Jones is expected to generate 4.22 times less return on investment than BTC Health. But when comparing it to its historical volatility, Dow Jones Industrial is 6.47 times less risky than BTC Health. It trades about 0.15 of its potential returns per unit of risk. BTC Health Limited is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3.50 in BTC Health Limited on November 3, 2024 and sell it today you would earn a total of 2.00 from holding BTC Health Limited or generate 57.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Dow Jones Industrial vs. BTC Health Limited
Performance |
| Timeline |
Dow Jones and BTC Health Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
BTC Health Limited
Pair trading matchups for BTC Health
Pair Trading with Dow Jones and BTC Health
The main advantage of trading using opposite Dow Jones and BTC Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, BTC Health 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 BTC Health will offset losses from the drop in BTC Health's long position.| Dow Jones vs. Cincinnati Financial | Dow Jones vs. Kellanova | Dow Jones vs. Acme United | Dow Jones vs. Procter Gamble |
| BTC Health vs. Aneka Tambang Tbk | BTC Health vs. BHP Group Limited | BTC Health vs. Rio Tinto | BTC Health vs. Macquarie Group Ltd |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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