Correlation Between Dow Jones and GD Culture
Can any of the company-specific risk be diversified away by investing in both Dow Jones and GD Culture 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 GD Culture 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 GD Culture Group, you can compare the effects of market volatilities on Dow Jones and GD Culture 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 GD Culture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and GD Culture.
Diversification Opportunities for Dow Jones and GD Culture
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dow and GDC is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and GD Culture Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GD Culture 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 GD Culture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GD Culture Group has no effect on the direction of Dow Jones i.e., Dow Jones and GD Culture go up and down completely randomly.
Pair Corralation between Dow Jones and GD Culture
Assuming the 90 days trading horizon Dow Jones is expected to generate 34.65 times less return on investment than GD Culture. But when comparing it to its historical volatility, Dow Jones Industrial is 65.27 times less risky than GD Culture. It trades about 0.08 of its potential returns per unit of risk. GD Culture Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 385.00 in GD Culture Group on November 1, 2024 and sell it today you would lose (244.00) from holding GD Culture Group or give up 63.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. GD Culture Group
Performance |
| Timeline |
Dow Jones and GD Culture Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
GD Culture Group
Pair trading matchups for GD Culture
Pair Trading with Dow Jones and GD Culture
The main advantage of trading using opposite Dow Jones and GD Culture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, GD Culture 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 GD Culture will offset losses from the drop in GD Culture's long position.| Dow Jones vs. WEC Energy Group | Dow Jones vs. Pure Cycle | Dow Jones vs. Tandy Leather Factory | Dow Jones vs. Tapestry |
| GD Culture vs. Blue Hat Interactive | GD Culture vs. Playstudios | GD Culture vs. Motorsport Gaming Us | GD Culture vs. Alpha Esports Tech |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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