Correlation Between Dow Jones and Cadence Bancorp
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Cadence 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 Cadence 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 Cadence Bancorp, you can compare the effects of market volatilities on Dow Jones and Cadence 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 Cadence Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Cadence Bancorp.
Diversification Opportunities for Dow Jones and Cadence Bancorp
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dow and Cadence is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Cadence Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadence 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 Cadence Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadence Bancorp has no effect on the direction of Dow Jones i.e., Dow Jones and Cadence Bancorp go up and down completely randomly.
Pair Corralation between Dow Jones and Cadence Bancorp
Assuming the 90 days trading horizon Dow Jones is expected to generate 2.31 times less return on investment than Cadence Bancorp. But when comparing it to its historical volatility, Dow Jones Industrial is 2.92 times less risky than Cadence Bancorp. It trades about 0.17 of its potential returns per unit of risk. Cadence Bancorp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,777 in Cadence Bancorp on August 28, 2024 and sell it today you would earn a total of 1,152 from holding Cadence Bancorp or generate 41.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Cadence Bancorp
Performance |
| Timeline |
Dow Jones and Cadence Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Cadence Bancorp
Pair trading matchups for Cadence Bancorp
Pair Trading with Dow Jones and Cadence Bancorp
The main advantage of trading using opposite Dow Jones and Cadence Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Cadence 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 Cadence Bancorp will offset losses from the drop in Cadence Bancorp's long position.| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
| Cadence Bancorp vs. NBT Bancorp | Cadence Bancorp vs. Financial Institutions | Cadence Bancorp vs. Berkshire Hills Bancorp | Cadence Bancorp vs. Fidelity DD Bancorp |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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