Correlation Between Dow Jones and Eat Well
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Eat Well 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 Eat Well 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 Eat Well Investment, you can compare the effects of market volatilities on Dow Jones and Eat Well 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 Eat Well. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Eat Well.
Diversification Opportunities for Dow Jones and Eat Well
Good diversification
The 3 months correlation between Dow and Eat is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Eat Well Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eat Well Investment 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 Eat Well. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eat Well Investment has no effect on the direction of Dow Jones i.e., Dow Jones and Eat Well go up and down completely randomly.
Pair Corralation between Dow Jones and Eat Well
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the Eat Well. But the index apears to be less risky and, when comparing its historical volatility, Dow Jones Industrial is 170.26 times less risky than Eat Well. The index trades about -0.21 of its potential returns per unit of risk. The Eat Well Investment is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 3.00 in Eat Well Investment on September 23, 2024 and sell it today you would earn a total of 17.00 from holding Eat Well Investment or generate 566.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Dow Jones Industrial vs. Eat Well Investment
Performance |
| Timeline |
Dow Jones and Eat Well Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Eat Well Investment
Pair trading matchups for Eat Well
Pair Trading with Dow Jones and Eat Well
The main advantage of trading using opposite Dow Jones and Eat Well positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Eat Well 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 Eat Well will offset losses from the drop in Eat Well's long position.| Dow Jones vs. Nok Airlines Public | Dow Jones vs. Alaska Air Group | Dow Jones vs. Universal Music Group | Dow Jones vs. Copa Holdings SA |
| Eat Well vs. Flow Capital Corp | Eat Well vs. Guardian Capital Group | Eat Well vs. Urbana | Eat Well vs. Princeton Capital |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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