Correlation Between Dow Jones and Dimet Public
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Dimet Public 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 Dimet Public 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 Dimet Public, you can compare the effects of market volatilities on Dow Jones and Dimet Public 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 Dimet Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Dimet Public.
Diversification Opportunities for Dow Jones and Dimet Public
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dow and Dimet is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Dimet Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimet Public 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 Dimet Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimet Public has no effect on the direction of Dow Jones i.e., Dow Jones and Dimet Public go up and down completely randomly.
Pair Corralation between Dow Jones and Dimet Public
Assuming the 90 days trading horizon Dow Jones is expected to generate 61.89 times less return on investment than Dimet Public. But when comparing it to its historical volatility, Dow Jones Industrial is 111.33 times less risky than Dimet Public. It trades about 0.14 of its potential returns per unit of risk. Dimet Public is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 24.00 in Dimet Public on September 3, 2024 and sell it today you would lose (1.00) from holding Dimet Public or give up 4.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.95% |
| Values | Daily Returns |
Dow Jones Industrial vs. Dimet Public
Performance |
| Timeline |
Dow Jones and Dimet Public Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Dimet Public
Pair trading matchups for Dimet Public
Pair Trading with Dow Jones and Dimet Public
The main advantage of trading using opposite Dow Jones and Dimet Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Dimet Public 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 Dimet Public will offset losses from the drop in Dimet Public's long position.| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
| Dimet Public vs. PTT Public | Dimet Public vs. The Siam Commercial | Dimet Public vs. Airports of Thailand | Dimet Public vs. CP ALL Public |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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