Correlation Between Dow Jones and Bank Tabungan
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Bank Tabungan 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 Bank Tabungan 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 Bank Tabungan Pensiunan, you can compare the effects of market volatilities on Dow Jones and Bank Tabungan 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 Bank Tabungan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Bank Tabungan.
Diversification Opportunities for Dow Jones and Bank Tabungan
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Dow and Bank is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Bank Tabungan Pensiunan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Tabungan Pensiunan 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 Bank Tabungan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Tabungan Pensiunan has no effect on the direction of Dow Jones i.e., Dow Jones and Bank Tabungan go up and down completely randomly.
Pair Corralation between Dow Jones and Bank Tabungan
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.3 times more return on investment than Bank Tabungan. However, Dow Jones Industrial is 3.34 times less risky than Bank Tabungan. It trades about 0.1 of its potential returns per unit of risk. Bank Tabungan Pensiunan is currently generating about -0.07 per unit of risk. If you would invest 3,897,241 in Dow Jones Industrial on August 25, 2024 and sell it today you would earn a total of 532,410 from holding Dow Jones Industrial or generate 13.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 93.68% |
| Values | Daily Returns |
Dow Jones Industrial vs. Bank Tabungan Pensiunan
Performance |
| Timeline |
Dow Jones and Bank Tabungan Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Bank Tabungan Pensiunan
Pair trading matchups for Bank Tabungan
Pair Trading with Dow Jones and Bank Tabungan
The main advantage of trading using opposite Dow Jones and Bank Tabungan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Bank Tabungan 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 Bank Tabungan will offset losses from the drop in Bank Tabungan's long position.| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
| Bank Tabungan vs. Paninvest Tbk | Bank Tabungan vs. Maskapai Reasuransi Indonesia | Bank Tabungan vs. Panin Sekuritas Tbk | Bank Tabungan vs. Wahana Ottomitra Multiartha |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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