Correlation Between Dow Jones and Emetals
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Emetals 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 Emetals 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 Emetals, you can compare the effects of market volatilities on Dow Jones and Emetals 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 Emetals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Emetals.
Diversification Opportunities for Dow Jones and Emetals
Modest diversification
The 3 months correlation between Dow and Emetals is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Emetals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emetals 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 Emetals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emetals has no effect on the direction of Dow Jones i.e., Dow Jones and Emetals go up and down completely randomly.
Pair Corralation between Dow Jones and Emetals
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.12 times more return on investment than Emetals. However, Dow Jones Industrial is 8.26 times less risky than Emetals. It trades about 0.03 of its potential returns per unit of risk. Emetals is currently generating about 0.0 per unit of risk. If you would invest 4,086,171 in Dow Jones Industrial on December 10, 2024 and sell it today you would earn a total of 105,000 from holding Dow Jones Industrial or generate 2.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Dow Jones Industrial vs. Emetals
Performance |
| Timeline |
Dow Jones and Emetals Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Emetals
Pair trading matchups for Emetals
Pair Trading with Dow Jones and Emetals
The main advantage of trading using opposite Dow Jones and Emetals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Emetals 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 Emetals will offset losses from the drop in Emetals' long position.| Dow Jones vs. The Gap, | Dow Jones vs. Corporacion America Airports | Dow Jones vs. Mesa Air Group | Dow Jones vs. National Vision Holdings |
| Emetals vs. Northern Star Resources | Emetals vs. Alcoa Inc | Emetals vs. Evolution Mining | Emetals vs. Bluescope Steel |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |