Correlation Between Dow Jones and Global Net
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Global Net 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 Global Net 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 Global Net Lease, you can compare the effects of market volatilities on Dow Jones and Global Net 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 Global Net. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Global Net.
Diversification Opportunities for Dow Jones and Global Net
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dow and Global is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Global Net Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Net Lease 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 Global Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Net Lease has no effect on the direction of Dow Jones i.e., Dow Jones and Global Net go up and down completely randomly.
Pair Corralation between Dow Jones and Global Net
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.63 times more return on investment than Global Net. However, Dow Jones Industrial is 1.59 times less risky than Global Net. It trades about 0.14 of its potential returns per unit of risk. Global Net Lease is currently generating about -0.04 per unit of risk. If you would invest 4,217,511 in Dow Jones Industrial on August 27, 2024 and sell it today you would earn a total of 212,140 from holding Dow Jones Industrial or generate 5.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Global Net Lease
Performance |
| Timeline |
Dow Jones and Global Net Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Global Net Lease
Pair trading matchups for Global Net
Pair Trading with Dow Jones and Global Net
The main advantage of trading using opposite Dow Jones and Global Net positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Global Net 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 Global Net will offset losses from the drop in Global Net's long position.| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
| Global Net vs. Global Net Lease | Global Net vs. Global Medical REIT | Global Net vs. City Office REIT | Global Net vs. ARMOUR Residential REIT |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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