Correlation Between Dow Jones and Cresco Labs
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Cresco Labs 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 Cresco Labs 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 Cresco Labs, you can compare the effects of market volatilities on Dow Jones and Cresco Labs 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 Cresco Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Cresco Labs.
Diversification Opportunities for Dow Jones and Cresco Labs
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and Cresco is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Cresco Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cresco Labs 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 Cresco Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cresco Labs has no effect on the direction of Dow Jones i.e., Dow Jones and Cresco Labs go up and down completely randomly.
Pair Corralation between Dow Jones and Cresco Labs
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.15 times more return on investment than Cresco Labs. However, Dow Jones Industrial is 6.58 times less risky than Cresco Labs. It trades about 0.09 of its potential returns per unit of risk. Cresco Labs is currently generating about -0.06 per unit of risk. If you would invest 3,985,387 in Dow Jones Industrial on October 22, 2024 and sell it today you would earn a total of 363,396 from holding Dow Jones Industrial or generate 9.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Dow Jones Industrial vs. Cresco Labs
Performance |
| Timeline |
Dow Jones and Cresco Labs Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Cresco Labs
Pair trading matchups for Cresco Labs
Pair Trading with Dow Jones and Cresco Labs
The main advantage of trading using opposite Dow Jones and Cresco Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Cresco Labs 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 Cresco Labs will offset losses from the drop in Cresco Labs' long position.| Dow Jones vs. Nasdaq Inc | Dow Jones vs. Summit Materials | Dow Jones vs. Vulcan Materials | Dow Jones vs. Celsius Holdings |
| Cresco Labs vs. Verano Holdings Corp | Cresco Labs vs. AYR Strategies Class | Cresco Labs vs. Green Thumb Industries | Cresco Labs vs. Marimed |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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