Correlation Between Dow Jones and Great Lakes
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Great Lakes 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 Great Lakes 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 Great Lakes Large, you can compare the effects of market volatilities on Dow Jones and Great Lakes 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 Great Lakes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Great Lakes.
Diversification Opportunities for Dow Jones and Great Lakes
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dow and Great is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Great Lakes Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Lakes Large 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 Great Lakes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Lakes Large has no effect on the direction of Dow Jones i.e., Dow Jones and Great Lakes go up and down completely randomly.
Pair Corralation between Dow Jones and Great Lakes
If you would invest 3,320,393 in Dow Jones Industrial on September 13, 2024 and sell it today you would earn a total of 1,071,019 from holding Dow Jones Industrial or generate 32.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 4.85% |
| Values | Daily Returns |
Dow Jones Industrial vs. Great Lakes Large
Performance |
| Timeline |
Dow Jones and Great Lakes Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Great Lakes Large
Pair trading matchups for Great Lakes
Pair Trading with Dow Jones and Great Lakes
The main advantage of trading using opposite Dow Jones and Great Lakes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Great Lakes 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 Great Lakes will offset losses from the drop in Great Lakes' long position.| Dow Jones vs. ChampionX | Dow Jones vs. Highway Holdings Limited | Dow Jones vs. Westinghouse Air Brake | Dow Jones vs. Cementos Pacasmayo SAA |
| Great Lakes vs. Allianzgi Health Sciences | Great Lakes vs. Baillie Gifford Health | Great Lakes vs. Tekla Healthcare Opportunities | Great Lakes vs. Baron Health Care |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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