Correlation Between Dow Jones and Hecla Mining
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Hecla Mining 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 Hecla Mining 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 Hecla Mining, you can compare the effects of market volatilities on Dow Jones and Hecla Mining 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 Hecla Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Hecla Mining.
Diversification Opportunities for Dow Jones and Hecla Mining
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dow and Hecla is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Hecla Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hecla Mining 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 Hecla Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hecla Mining has no effect on the direction of Dow Jones i.e., Dow Jones and Hecla Mining go up and down completely randomly.
Pair Corralation between Dow Jones and Hecla Mining
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.12 times more return on investment than Hecla Mining. However, Dow Jones is 1.12 times more volatile than Hecla Mining. It trades about 0.26 of its potential returns per unit of risk. Hecla Mining is currently generating about 0.09 per unit of risk. If you would invest 4,238,757 in Dow Jones Industrial on August 27, 2024 and sell it today you would earn a total of 234,900 from holding Dow Jones Industrial or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Hecla Mining
Performance |
| Timeline |
Dow Jones and Hecla Mining Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Hecla Mining
Pair trading matchups for Hecla Mining
Pair Trading with Dow Jones and Hecla Mining
The main advantage of trading using opposite Dow Jones and Hecla Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Hecla Mining 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 Hecla Mining will offset losses from the drop in Hecla Mining's long position.| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
| Hecla Mining vs. Triple Flag Precious | Hecla Mining vs. McEwen Mining | Hecla Mining vs. Endeavour Silver Corp | Hecla Mining vs. Hecla Mining |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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