Correlation Between Dow Jones and Ganfeng Lithium
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Ganfeng Lithium 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 Ganfeng Lithium 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 Ganfeng Lithium Co, you can compare the effects of market volatilities on Dow Jones and Ganfeng Lithium 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 Ganfeng Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Ganfeng Lithium.
Diversification Opportunities for Dow Jones and Ganfeng Lithium
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Ganfeng is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Ganfeng Lithium Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ganfeng Lithium 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 Ganfeng Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ganfeng Lithium has no effect on the direction of Dow Jones i.e., Dow Jones and Ganfeng Lithium go up and down completely randomly.
Pair Corralation between Dow Jones and Ganfeng Lithium
Assuming the 90 days trading horizon Dow Jones is expected to generate 2.19 times less return on investment than Ganfeng Lithium. But when comparing it to its historical volatility, Dow Jones Industrial is 4.9 times less risky than Ganfeng Lithium. It trades about 0.37 of its potential returns per unit of risk. Ganfeng Lithium Co is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 272.00 in Ganfeng Lithium Co on September 1, 2024 and sell it today you would earn a total of 43.00 from holding Ganfeng Lithium Co or generate 15.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dow Jones Industrial vs. Ganfeng Lithium Co
Performance |
| Timeline |
Dow Jones and Ganfeng Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Ganfeng Lithium Co
Pair trading matchups for Ganfeng Lithium
Pair Trading with Dow Jones and Ganfeng Lithium
The main advantage of trading using opposite Dow Jones and Ganfeng Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Ganfeng Lithium 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 Ganfeng Lithium will offset losses from the drop in Ganfeng Lithium's long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| Ganfeng Lithium vs. BASF SE NA | Ganfeng Lithium vs. Braskem SA Class | Ganfeng Lithium vs. Lsb Industries | Ganfeng Lithium vs. Dow Inc |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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