Correlation Between Dow Jones and Globe Telecom
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Globe Telecom 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 Globe Telecom 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 Globe Telecom, you can compare the effects of market volatilities on Dow Jones and Globe Telecom 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 Globe Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Globe Telecom.
Diversification Opportunities for Dow Jones and Globe Telecom
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and Globe is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Globe Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globe Telecom 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 Globe Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globe Telecom has no effect on the direction of Dow Jones i.e., Dow Jones and Globe Telecom go up and down completely randomly.
Pair Corralation between Dow Jones and Globe Telecom
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.52 times more return on investment than Globe Telecom. However, Dow Jones Industrial is 1.92 times less risky than Globe Telecom. It trades about 0.15 of its potential returns per unit of risk. Globe Telecom is currently generating about 0.06 per unit of risk. If you would invest 3,312,955 in Dow Jones Industrial on August 29, 2024 and sell it today you would earn a total of 1,159,251 from holding Dow Jones Industrial or generate 34.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.56% |
| Values | Daily Returns |
Dow Jones Industrial vs. Globe Telecom
Performance |
| Timeline |
Dow Jones and Globe Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Globe Telecom
Pair trading matchups for Globe Telecom
Pair Trading with Dow Jones and Globe Telecom
The main advantage of trading using opposite Dow Jones and Globe Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Globe Telecom 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 Globe Telecom will offset losses from the drop in Globe Telecom's long position.| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
| Globe Telecom vs. PLDT Inc | Globe Telecom vs. Allhome Corp | Globe Telecom vs. Jollibee Foods Corp | Globe Telecom vs. LFM Properties 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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