Correlation Between Dow Jones and COSCO SHIPPING
Can any of the company-specific risk be diversified away by investing in both Dow Jones and COSCO SHIPPING 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 COSCO SHIPPING 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 COSCO SHIPPING Holdings, you can compare the effects of market volatilities on Dow Jones and COSCO SHIPPING 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 COSCO SHIPPING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and COSCO SHIPPING.
Diversification Opportunities for Dow Jones and COSCO SHIPPING
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dow and COSCO is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and COSCO SHIPPING Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSCO SHIPPING Holdings 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 COSCO SHIPPING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSCO SHIPPING Holdings has no effect on the direction of Dow Jones i.e., Dow Jones and COSCO SHIPPING go up and down completely randomly.
Pair Corralation between Dow Jones and COSCO SHIPPING
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.25 times more return on investment than COSCO SHIPPING. However, Dow Jones Industrial is 4.07 times less risky than COSCO SHIPPING. It trades about 0.16 of its potential returns per unit of risk. COSCO SHIPPING Holdings is currently generating about -0.03 per unit of risk. If you would invest 3,857,103 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 633,962 from holding Dow Jones Industrial or generate 16.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. COSCO SHIPPING Holdings
Performance |
| Timeline |
Dow Jones and COSCO SHIPPING Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
COSCO SHIPPING Holdings
Pair trading matchups for COSCO SHIPPING
Pair Trading with Dow Jones and COSCO SHIPPING
The main advantage of trading using opposite Dow Jones and COSCO SHIPPING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, COSCO SHIPPING 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 COSCO SHIPPING will offset losses from the drop in COSCO SHIPPING's long position.| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
| COSCO SHIPPING vs. Mitsui OSK Lines | COSCO SHIPPING vs. Hapag Lloyd Aktiengesellschaft | COSCO SHIPPING vs. AP Moeller Maersk AS | COSCO SHIPPING vs. Orient Overseas Limited |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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