Correlation Between Dow Jones and AB High
Can any of the company-specific risk be diversified away by investing in both Dow Jones and AB High 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 AB High 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 AB High Dividend, you can compare the effects of market volatilities on Dow Jones and AB High 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 AB High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and AB High.
Diversification Opportunities for Dow Jones and AB High
Almost no diversification
The 3 months correlation between Dow and HIDV is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and AB High Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB High Dividend 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 AB High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB High Dividend has no effect on the direction of Dow Jones i.e., Dow Jones and AB High go up and down completely randomly.
Pair Corralation between Dow Jones and AB High
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.7 times less return on investment than AB High. But when comparing it to its historical volatility, Dow Jones Industrial is 1.11 times less risky than AB High. It trades about 0.08 of its potential returns per unit of risk. AB High Dividend is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 4,972 in AB High Dividend on September 3, 2024 and sell it today you would earn a total of 2,522 from holding AB High Dividend or generate 50.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 86.67% |
| Values | Daily Returns |
Dow Jones Industrial vs. AB High Dividend
Performance |
| Timeline |
Dow Jones and AB High Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
AB High Dividend
Pair trading matchups for AB High
Pair Trading with Dow Jones and AB High
The main advantage of trading using opposite Dow Jones and AB High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, AB High 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 AB High will offset losses from the drop in AB High's long position.| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
| AB High vs. AB Low Volatility | AB High vs. AB Disruptors ETF | AB High vs. AB Ultra Short | AB High vs. Ab Tax Aware Short |
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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