Correlation Between Dow Jones and Conestoga Smid
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Conestoga Smid 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 Conestoga Smid 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 Conestoga Smid Cap, you can compare the effects of market volatilities on Dow Jones and Conestoga Smid 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 Conestoga Smid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Conestoga Smid.
Diversification Opportunities for Dow Jones and Conestoga Smid
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dow and Conestoga is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Conestoga Smid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Conestoga Smid Cap 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 Conestoga Smid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Conestoga Smid Cap has no effect on the direction of Dow Jones i.e., Dow Jones and Conestoga Smid go up and down completely randomly.
Pair Corralation between Dow Jones and Conestoga Smid
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.76 times more return on investment than Conestoga Smid. However, Dow Jones Industrial is 1.31 times less risky than Conestoga Smid. It trades about 0.06 of its potential returns per unit of risk. Conestoga Smid Cap is currently generating about 0.01 per unit of risk. If you would invest 4,156,308 in Dow Jones Industrial on November 28, 2024 and sell it today you would earn a total of 205,808 from holding Dow Jones Industrial or generate 4.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.18% |
| Values | Daily Returns |
Dow Jones Industrial vs. Conestoga Smid Cap
Performance |
| Timeline |
Dow Jones and Conestoga Smid Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Conestoga Smid Cap
Pair trading matchups for Conestoga Smid
Pair Trading with Dow Jones and Conestoga Smid
The main advantage of trading using opposite Dow Jones and Conestoga Smid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Conestoga Smid 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 Conestoga Smid will offset losses from the drop in Conestoga Smid's long position.| Dow Jones vs. Gladstone Investment | Dow Jones vs. BW Offshore Limited | Dow Jones vs. Fidus Investment Corp | Dow Jones vs. Aperture Health |
| Conestoga Smid vs. Fidelity Advisor Technology | Conestoga Smid vs. Red Oak Technology | Conestoga Smid vs. Towpath Technology | Conestoga Smid vs. Hennessy Technology Fund |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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