Correlation Between Dow Jones and Covenant Logistics
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Covenant Logistics 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 Covenant Logistics 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 Covenant Logistics Group,, you can compare the effects of market volatilities on Dow Jones and Covenant Logistics 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 Covenant Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Covenant Logistics.
Diversification Opportunities for Dow Jones and Covenant Logistics
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dow and Covenant is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Covenant Logistics Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Covenant Logistics Group, 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 Covenant Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Covenant Logistics Group, has no effect on the direction of Dow Jones i.e., Dow Jones and Covenant Logistics go up and down completely randomly.
Pair Corralation between Dow Jones and Covenant Logistics
Assuming the 90 days trading horizon Dow Jones is expected to generate 2.03 times less return on investment than Covenant Logistics. But when comparing it to its historical volatility, Dow Jones Industrial is 2.74 times less risky than Covenant Logistics. It trades about 0.29 of its potential returns per unit of risk. Covenant Logistics Group, is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 5,131 in Covenant Logistics Group, on August 31, 2024 and sell it today you would earn a total of 660.00 from holding Covenant Logistics Group, or generate 12.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Dow Jones Industrial vs. Covenant Logistics Group,
Performance |
| Timeline |
Dow Jones and Covenant Logistics Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Covenant Logistics Group,
Pair trading matchups for Covenant Logistics
Pair Trading with Dow Jones and Covenant Logistics
The main advantage of trading using opposite Dow Jones and Covenant Logistics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Covenant Logistics 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 Covenant Logistics will offset losses from the drop in Covenant Logistics' 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 |
| Covenant Logistics vs. PAMT P | Covenant Logistics vs. Safe Bulkers | Covenant Logistics vs. Safe Bulkers | Covenant Logistics vs. Atlas Corp |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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