Correlation Between Dow Jones and Gouverneur Bancorp
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Gouverneur Bancorp 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 Gouverneur Bancorp 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 Gouverneur Bancorp, you can compare the effects of market volatilities on Dow Jones and Gouverneur Bancorp 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 Gouverneur Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Gouverneur Bancorp.
Diversification Opportunities for Dow Jones and Gouverneur Bancorp
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Gouverneur is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Gouverneur Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gouverneur Bancorp 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 Gouverneur Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gouverneur Bancorp has no effect on the direction of Dow Jones i.e., Dow Jones and Gouverneur Bancorp go up and down completely randomly.
Pair Corralation between Dow Jones and Gouverneur Bancorp
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.22 times less return on investment than Gouverneur Bancorp. In addition to that, Dow Jones is 1.0 times more volatile than Gouverneur Bancorp. It trades about 0.37 of its total potential returns per unit of risk. Gouverneur Bancorp is currently generating about 0.45 per unit of volatility. If you would invest 1,117 in Gouverneur Bancorp on September 1, 2024 and sell it today you would earn a total of 104.00 from holding Gouverneur Bancorp or generate 9.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Gouverneur Bancorp
Performance |
| Timeline |
Dow Jones and Gouverneur Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Gouverneur Bancorp
Pair trading matchups for Gouverneur Bancorp
Pair Trading with Dow Jones and Gouverneur Bancorp
The main advantage of trading using opposite Dow Jones and Gouverneur Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Gouverneur Bancorp 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 Gouverneur Bancorp will offset losses from the drop in Gouverneur Bancorp's long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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