Correlation Between Dow Jones and Gan Shmuel
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Gan Shmuel 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 Gan Shmuel 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 Gan Shmuel, you can compare the effects of market volatilities on Dow Jones and Gan Shmuel 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 Gan Shmuel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Gan Shmuel.
Diversification Opportunities for Dow Jones and Gan Shmuel
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dow and Gan is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Gan Shmuel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gan Shmuel 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 Gan Shmuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gan Shmuel has no effect on the direction of Dow Jones i.e., Dow Jones and Gan Shmuel go up and down completely randomly.
Pair Corralation between Dow Jones and Gan Shmuel
Assuming the 90 days trading horizon Dow Jones is expected to generate 5.87 times less return on investment than Gan Shmuel. But when comparing it to its historical volatility, Dow Jones Industrial is 3.36 times less risky than Gan Shmuel. It trades about 0.08 of its potential returns per unit of risk. Gan Shmuel is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 119,299 in Gan Shmuel on September 3, 2024 and sell it today you would earn a total of 272,701 from holding Gan Shmuel or generate 228.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 77.47% |
| Values | Daily Returns |
Dow Jones Industrial vs. Gan Shmuel
Performance |
| Timeline |
Dow Jones and Gan Shmuel Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Gan Shmuel
Pair trading matchups for Gan Shmuel
Pair Trading with Dow Jones and Gan Shmuel
The main advantage of trading using opposite Dow Jones and Gan Shmuel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Gan Shmuel 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 Gan Shmuel will offset losses from the drop in Gan Shmuel's long position.| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
| Gan Shmuel vs. Shufersal | Gan Shmuel vs. Rami Levi | Gan Shmuel vs. Tiv Taam | Gan Shmuel vs. M Yochananof and |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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