Correlation Between Dow Jones and Guardian Canadian
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Guardian Canadian 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 Guardian Canadian 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 Guardian Canadian Sector, you can compare the effects of market volatilities on Dow Jones and Guardian Canadian 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 Guardian Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Guardian Canadian.
Diversification Opportunities for Dow Jones and Guardian Canadian
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dow and Guardian is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Guardian Canadian Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardian Canadian Sector 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 Guardian Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardian Canadian Sector has no effect on the direction of Dow Jones i.e., Dow Jones and Guardian Canadian go up and down completely randomly.
Pair Corralation between Dow Jones and Guardian Canadian
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.21 times more return on investment than Guardian Canadian. However, Dow Jones is 1.21 times more volatile than Guardian Canadian Sector. It trades about 0.16 of its potential returns per unit of risk. Guardian Canadian Sector is currently generating about 0.18 per unit of risk. If you would invest 3,880,733 in Dow Jones Industrial on September 3, 2024 and sell it today you would earn a total of 610,332 from holding Dow Jones Industrial or generate 15.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Guardian Canadian Sector
Performance |
| Timeline |
Dow Jones and Guardian Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Guardian Canadian Sector
Pair trading matchups for Guardian Canadian
Pair Trading with Dow Jones and Guardian Canadian
The main advantage of trading using opposite Dow Jones and Guardian Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Guardian Canadian 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 Guardian Canadian will offset losses from the drop in Guardian Canadian's long position.| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
| Guardian Canadian vs. Guardian Directed Equity | Guardian Canadian vs. Guardian Canadian Focused | Guardian Canadian vs. Guardian Ultra Short Canadian | Guardian Canadian vs. Guardian i3 Global |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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