Correlation Between Dow Jones and Golden Heaven
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Golden Heaven 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 Golden Heaven 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 Golden Heaven Group, you can compare the effects of market volatilities on Dow Jones and Golden Heaven 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 Golden Heaven. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Golden Heaven.
Diversification Opportunities for Dow Jones and Golden Heaven
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Dow and Golden is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Golden Heaven Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Heaven 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 Golden Heaven. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Heaven Group has no effect on the direction of Dow Jones i.e., Dow Jones and Golden Heaven go up and down completely randomly.
Pair Corralation between Dow Jones and Golden Heaven
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.12 times more return on investment than Golden Heaven. However, Dow Jones Industrial is 8.23 times less risky than Golden Heaven. It trades about 0.37 of its potential returns per unit of risk. Golden Heaven Group is currently generating about -0.12 per unit of risk. If you would invest 4,176,346 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 314,719 from holding Dow Jones Industrial or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Golden Heaven Group
Performance |
| Timeline |
Dow Jones and Golden Heaven Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Golden Heaven Group
Pair trading matchups for Golden Heaven
Pair Trading with Dow Jones and Golden Heaven
The main advantage of trading using opposite Dow Jones and Golden Heaven positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Golden Heaven 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 Golden Heaven will offset losses from the drop in Golden Heaven's long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| Golden Heaven vs. Cimpress NV | Golden Heaven vs. Suburban Propane Partners | Golden Heaven vs. WiMi Hologram Cloud | Golden Heaven vs. Vistra Energy Corp |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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