Correlation Between Dow Jones and HAVN Life
Can any of the company-specific risk be diversified away by investing in both Dow Jones and HAVN Life 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 HAVN Life 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 HAVN Life Sciences, you can compare the effects of market volatilities on Dow Jones and HAVN Life 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 HAVN Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and HAVN Life.
Diversification Opportunities for Dow Jones and HAVN Life
Poor diversification
The 3 months correlation between Dow and HAVN is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and HAVN Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HAVN Life Sciences 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 HAVN Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HAVN Life Sciences has no effect on the direction of Dow Jones i.e., Dow Jones and HAVN Life go up and down completely randomly.
Pair Corralation between Dow Jones and HAVN Life
Assuming the 90 days trading horizon Dow Jones is expected to generate 103.74 times less return on investment than HAVN Life. But when comparing it to its historical volatility, Dow Jones Industrial is 86.85 times less risky than HAVN Life. It trades about 0.08 of its potential returns per unit of risk. HAVN Life Sciences is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 5.00 in HAVN Life Sciences on September 2, 2024 and sell it today you would lose (4.48) from holding HAVN Life Sciences or give up 89.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Dow Jones Industrial vs. HAVN Life Sciences
Performance |
| Timeline |
Dow Jones and HAVN Life Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
HAVN Life Sciences
Pair trading matchups for HAVN Life
Pair Trading with Dow Jones and HAVN Life
The main advantage of trading using opposite Dow Jones and HAVN Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, HAVN Life 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 HAVN Life will offset losses from the drop in HAVN Life's long position.| Dow Jones vs. Dream Finders Homes | Dow Jones vs. GEN Restaurant Group, | Dow Jones vs. National Beverage Corp | Dow Jones vs. BJs Restaurants |
| HAVN Life vs. Rigel Pharmaceuticals | HAVN Life vs. Geron | HAVN Life vs. Verastem | HAVN Life vs. Immutep Ltd ADR |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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