Correlation Between Dow Jones and Galore Resources
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Galore Resources 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 Galore Resources 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 Galore Resources, you can compare the effects of market volatilities on Dow Jones and Galore Resources 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 Galore Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Galore Resources.
Diversification Opportunities for Dow Jones and Galore Resources
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Galore is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Galore Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galore Resources 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 Galore Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galore Resources has no effect on the direction of Dow Jones i.e., Dow Jones and Galore Resources go up and down completely randomly.
Pair Corralation between Dow Jones and Galore Resources
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the Galore Resources. But the index apears to be less risky and, when comparing its historical volatility, Dow Jones Industrial is 42.75 times less risky than Galore Resources. The index trades about -0.01 of its potential returns per unit of risk. The Galore Resources is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1.00 in Galore Resources on September 12, 2024 and sell it today you would earn a total of 0.00 from holding Galore Resources or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dow Jones Industrial vs. Galore Resources
Performance |
| Timeline |
Dow Jones and Galore Resources Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Galore Resources
Pair trading matchups for Galore Resources
Pair Trading with Dow Jones and Galore Resources
The main advantage of trading using opposite Dow Jones and Galore Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Galore Resources 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 Galore Resources will offset losses from the drop in Galore Resources' long position.| Dow Jones vs. Aeye Inc | Dow Jones vs. Gentex | Dow Jones vs. Marine Products | Dow Jones vs. CarsalesCom Ltd ADR |
| Galore Resources vs. Bird Construction | Galore Resources vs. Lion One Metals | Galore Resources vs. Osisko Metals | Galore Resources vs. Endeavour Silver 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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