Correlation Between Dow Jones and ESE Entertainment
Can any of the company-specific risk be diversified away by investing in both Dow Jones and ESE Entertainment 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 ESE Entertainment 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 ESE Entertainment, you can compare the effects of market volatilities on Dow Jones and ESE Entertainment 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 ESE Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and ESE Entertainment.
Diversification Opportunities for Dow Jones and ESE Entertainment
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and ESE is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and ESE Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESE Entertainment 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 ESE Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESE Entertainment has no effect on the direction of Dow Jones i.e., Dow Jones and ESE Entertainment go up and down completely randomly.
Pair Corralation between Dow Jones and ESE Entertainment
Assuming the 90 days trading horizon Dow Jones is expected to generate 2.27 times less return on investment than ESE Entertainment. But when comparing it to its historical volatility, Dow Jones Industrial is 13.92 times less risky than ESE Entertainment. It trades about 0.12 of its potential returns per unit of risk. ESE Entertainment is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 15.00 in ESE Entertainment on September 1, 2024 and sell it today you would lose (8.50) from holding ESE Entertainment or give up 56.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. ESE Entertainment
Performance |
| Timeline |
Dow Jones and ESE Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
ESE Entertainment
Pair trading matchups for ESE Entertainment
Pair Trading with Dow Jones and ESE Entertainment
The main advantage of trading using opposite Dow Jones and ESE Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, ESE Entertainment 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 ESE Entertainment will offset losses from the drop in ESE Entertainment's long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| ESE Entertainment vs. Thunderbird Entertainment Group | ESE Entertainment vs. VerticalScope Holdings | ESE Entertainment vs. WildBrain | ESE Entertainment vs. iShares Canadian HYBrid |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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