Correlation Between Dow Jones and GreenTree Hospitality
Can any of the company-specific risk be diversified away by investing in both Dow Jones and GreenTree Hospitality 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 GreenTree Hospitality 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 GreenTree Hospitality Group, you can compare the effects of market volatilities on Dow Jones and GreenTree Hospitality 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 GreenTree Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and GreenTree Hospitality.
Diversification Opportunities for Dow Jones and GreenTree Hospitality
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dow and GreenTree is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and GreenTree Hospitality Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenTree Hospitality 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 GreenTree Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenTree Hospitality has no effect on the direction of Dow Jones i.e., Dow Jones and GreenTree Hospitality go up and down completely randomly.
Pair Corralation between Dow Jones and GreenTree Hospitality
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.61 times less return on investment than GreenTree Hospitality. But when comparing it to its historical volatility, Dow Jones Industrial is 4.11 times less risky than GreenTree Hospitality. It trades about 0.12 of its potential returns per unit of risk. GreenTree Hospitality Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 248.00 in GreenTree Hospitality Group on November 2, 2024 and sell it today you would earn a total of 27.00 from holding GreenTree Hospitality Group or generate 10.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.04% |
| Values | Daily Returns |
Dow Jones Industrial vs. GreenTree Hospitality Group
Performance |
| Timeline |
Dow Jones and GreenTree Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
GreenTree Hospitality Group
Pair trading matchups for GreenTree Hospitality
Pair Trading with Dow Jones and GreenTree Hospitality
The main advantage of trading using opposite Dow Jones and GreenTree Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, GreenTree Hospitality 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 GreenTree Hospitality will offset losses from the drop in GreenTree Hospitality's long position.| Dow Jones vs. Boston Properties | Dow Jones vs. Suntory Beverage Food | Dow Jones vs. Envista Holdings Corp | Dow Jones vs. Fevertree Drinks Plc |
| GreenTree Hospitality vs. InterContinental Hotels Group | GreenTree Hospitality vs. Atour Lifestyle Holdings | GreenTree Hospitality vs. Huazhu Group | GreenTree Hospitality vs. Hyatt Hotels |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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