Correlation Between Dow Jones and Brownies Marine
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Brownies Marine 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 Brownies Marine 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 Brownies Marine Group, you can compare the effects of market volatilities on Dow Jones and Brownies Marine 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 Brownies Marine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Brownies Marine.
Diversification Opportunities for Dow Jones and Brownies Marine
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dow and Brownies is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Brownies Marine Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brownies Marine Group 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 Brownies Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brownies Marine Group has no effect on the direction of Dow Jones i.e., Dow Jones and Brownies Marine go up and down completely randomly.
Pair Corralation between Dow Jones and Brownies Marine
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.9 times less return on investment than Brownies Marine. But when comparing it to its historical volatility, Dow Jones Industrial is 22.05 times less risky than Brownies Marine. It trades about 0.26 of its potential returns per unit of risk. Brownies Marine Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1.19 in Brownies Marine Group on August 27, 2024 and sell it today you would lose (0.39) from holding Brownies Marine Group or give up 32.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Brownies Marine Group
Performance |
| Timeline |
Dow Jones and Brownies Marine Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Brownies Marine Group
Pair trading matchups for Brownies Marine
Pair Trading with Dow Jones and Brownies Marine
The main advantage of trading using opposite Dow Jones and Brownies Marine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Brownies Marine 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 Brownies Marine will offset losses from the drop in Brownies Marine'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 |
| Brownies Marine vs. FitLife Brands, Common | Brownies Marine vs. HUMANA INC | Brownies Marine vs. SCOR PK | Brownies Marine vs. Aquagold International |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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