Correlation Between Dow Jones and Equitable
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Equitable 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 Equitable 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 Equitable Group, you can compare the effects of market volatilities on Dow Jones and Equitable 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 Equitable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Equitable.
Diversification Opportunities for Dow Jones and Equitable
Very weak diversification
The 3 months correlation between Dow and Equitable is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Equitable Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equitable 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 Equitable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equitable Group has no effect on the direction of Dow Jones i.e., Dow Jones and Equitable go up and down completely randomly.
Pair Corralation between Dow Jones and Equitable
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.42 times less return on investment than Equitable. But when comparing it to its historical volatility, Dow Jones Industrial is 2.44 times less risky than Equitable. It trades about 0.08 of its potential returns per unit of risk. Equitable Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 8,938 in Equitable Group on November 8, 2024 and sell it today you would earn a total of 1,721 from holding Equitable Group or generate 19.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Equitable Group
Performance |
| Timeline |
Dow Jones and Equitable Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Equitable Group
Pair trading matchups for Equitable
Pair Trading with Dow Jones and Equitable
The main advantage of trading using opposite Dow Jones and Equitable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Equitable 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 Equitable will offset losses from the drop in Equitable's long position.| Dow Jones vs. National Vision Holdings | Dow Jones vs. Grocery Outlet Holding | Dow Jones vs. Asbury Automotive Group | Dow Jones vs. Hanover Foods |
| Equitable vs. goeasy | Equitable vs. Canadian Western Bank | Equitable vs. TFI International | Equitable vs. Intact Financial |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |