Correlation Between Dow Jones and Huntington Ingalls
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Huntington Ingalls 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 Huntington Ingalls 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 Huntington Ingalls Industries, you can compare the effects of market volatilities on Dow Jones and Huntington Ingalls 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 Huntington Ingalls. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Huntington Ingalls.
Diversification Opportunities for Dow Jones and Huntington Ingalls
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dow and Huntington is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Huntington Ingalls Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huntington Ingalls 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 Huntington Ingalls. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huntington Ingalls has no effect on the direction of Dow Jones i.e., Dow Jones and Huntington Ingalls go up and down completely randomly.
Pair Corralation between Dow Jones and Huntington Ingalls
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.28 times more return on investment than Huntington Ingalls. However, Dow Jones Industrial is 3.56 times less risky than Huntington Ingalls. It trades about 0.12 of its potential returns per unit of risk. Huntington Ingalls Industries is currently generating about -0.06 per unit of risk. If you would invest 3,885,286 in Dow Jones Industrial on August 23, 2024 and sell it today you would earn a total of 455,561 from holding Dow Jones Industrial or generate 11.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Huntington Ingalls Industries
Performance |
| Timeline |
Dow Jones and Huntington Ingalls Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Huntington Ingalls Industries
Pair trading matchups for Huntington Ingalls
Pair Trading with Dow Jones and Huntington Ingalls
The main advantage of trading using opposite Dow Jones and Huntington Ingalls positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Huntington Ingalls 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 Huntington Ingalls will offset losses from the drop in Huntington Ingalls' long position.| Dow Jones vs. Barrick Gold Corp | Dow Jones vs. Jutal Offshore Oil | Dow Jones vs. Eastern Co | Dow Jones vs. Weyco Group |
| Huntington Ingalls vs. Lockheed Martin | Huntington Ingalls vs. Raytheon Technologies Corp | Huntington Ingalls vs. L3Harris Technologies | Huntington Ingalls vs. Northrop Grumman |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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