Correlation Between Dow Jones and Cardio Diagnostics
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Cardio Diagnostics 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 Cardio Diagnostics 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 Cardio Diagnostics Holdings, you can compare the effects of market volatilities on Dow Jones and Cardio Diagnostics 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 Cardio Diagnostics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Cardio Diagnostics.
Diversification Opportunities for Dow Jones and Cardio Diagnostics
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dow and Cardio is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Cardio Diagnostics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardio Diagnostics 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 Cardio Diagnostics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardio Diagnostics has no effect on the direction of Dow Jones i.e., Dow Jones and Cardio Diagnostics go up and down completely randomly.
Pair Corralation between Dow Jones and Cardio Diagnostics
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.52 times less return on investment than Cardio Diagnostics. But when comparing it to its historical volatility, Dow Jones Industrial is 21.31 times less risky than Cardio Diagnostics. It trades about 0.37 of its potential returns per unit of risk. Cardio Diagnostics Holdings is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3.80 in Cardio Diagnostics Holdings on September 1, 2024 and sell it today you would lose (0.80) from holding Cardio Diagnostics Holdings or give up 21.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Dow Jones Industrial vs. Cardio Diagnostics Holdings
Performance |
| Timeline |
Dow Jones and Cardio Diagnostics Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Cardio Diagnostics Holdings
Pair trading matchups for Cardio Diagnostics
Pair Trading with Dow Jones and Cardio Diagnostics
The main advantage of trading using opposite Dow Jones and Cardio Diagnostics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Cardio Diagnostics 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 Cardio Diagnostics will offset losses from the drop in Cardio Diagnostics' long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| Cardio Diagnostics vs. Cardio Diagnostics Holdings | Cardio Diagnostics vs. Revelation Biosciences | Cardio Diagnostics vs. LMF Acquisition Opportunities | Cardio Diagnostics vs. OmniAb Inc |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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