Correlation Between Dow Jones and Expedia
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Expedia 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 Expedia 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 Expedia Group, you can compare the effects of market volatilities on Dow Jones and Expedia 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 Expedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Expedia.
Diversification Opportunities for Dow Jones and Expedia
Almost no diversification
The 3 months correlation between Dow and Expedia is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Expedia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expedia 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 Expedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expedia Group has no effect on the direction of Dow Jones i.e., Dow Jones and Expedia go up and down completely randomly.
Pair Corralation between Dow Jones and Expedia
Assuming the 90 days trading horizon Dow Jones is expected to generate 2.88 times less return on investment than Expedia. But when comparing it to its historical volatility, Dow Jones Industrial is 3.54 times less risky than Expedia. It trades about 0.08 of its potential returns per unit of risk. Expedia Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 8,651 in Expedia Group on August 28, 2024 and sell it today you would earn a total of 8,907 from holding Expedia Group or generate 102.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 98.22% |
| Values | Daily Returns |
Dow Jones Industrial vs. Expedia Group
Performance |
| Timeline |
Dow Jones and Expedia Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Expedia Group
Pair trading matchups for Expedia
Pair Trading with Dow Jones and Expedia
The main advantage of trading using opposite Dow Jones and Expedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Expedia 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 Expedia will offset losses from the drop in Expedia's long position.| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
| Expedia vs. PLAYTIKA HOLDING DL 01 | Expedia vs. BOSTON BEER A | Expedia vs. SCANSOURCE | Expedia vs. Monster Beverage 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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