Correlation Between Dow Jones and Golden Energy
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Golden Energy 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 Energy 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 Energy Offshore, you can compare the effects of market volatilities on Dow Jones and Golden Energy 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 Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Golden Energy.
Diversification Opportunities for Dow Jones and Golden Energy
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Golden is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Golden Energy Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Energy Offshore 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 Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Energy Offshore has no effect on the direction of Dow Jones i.e., Dow Jones and Golden Energy go up and down completely randomly.
Pair Corralation between Dow Jones and Golden Energy
Assuming the 90 days trading horizon Dow Jones is expected to generate 102.86 times less return on investment than Golden Energy. But when comparing it to its historical volatility, Dow Jones Industrial is 127.58 times less risky than Golden Energy. It trades about 0.11 of its potential returns per unit of risk. Golden Energy Offshore is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 15.00 in Golden Energy Offshore on September 3, 2024 and sell it today you would earn a total of 255.00 from holding Golden Energy Offshore or generate 1700.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 53.51% |
| Values | Daily Returns |
Dow Jones Industrial vs. Golden Energy Offshore
Performance |
| Timeline |
Dow Jones and Golden Energy Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Golden Energy Offshore
Pair trading matchups for Golden Energy
Pair Trading with Dow Jones and Golden Energy
The main advantage of trading using opposite Dow Jones and Golden Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Golden Energy 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 Energy will offset losses from the drop in Golden Energy's long position.| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
| Golden Energy vs. Boyd Gaming | Golden Energy vs. Starbucks | Golden Energy vs. RCI Hospitality Holdings | Golden Energy vs. Life Time Group |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |