Correlation Between Dow Jones and Hitachi Metals
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Hitachi Metals 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 Hitachi Metals 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 Hitachi Metals, you can compare the effects of market volatilities on Dow Jones and Hitachi Metals 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 Hitachi Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Hitachi Metals.
Diversification Opportunities for Dow Jones and Hitachi Metals
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dow and Hitachi is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Hitachi Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi Metals 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 Hitachi Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hitachi Metals has no effect on the direction of Dow Jones i.e., Dow Jones and Hitachi Metals go up and down completely randomly.
Pair Corralation between Dow Jones and Hitachi Metals
If you would invest 4,109,142 in Dow Jones Industrial on August 28, 2024 and sell it today you would earn a total of 376,889 from holding Dow Jones Industrial or generate 9.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 1.56% |
| Values | Daily Returns |
Dow Jones Industrial vs. Hitachi Metals
Performance |
| Timeline |
Dow Jones and Hitachi Metals Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Hitachi Metals
Pair trading matchups for Hitachi Metals
Pair Trading with Dow Jones and Hitachi Metals
The main advantage of trading using opposite Dow Jones and Hitachi Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Hitachi Metals 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 Hitachi Metals will offset losses from the drop in Hitachi Metals' long position.| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
| Hitachi Metals vs. Mill City Ventures | Hitachi Metals vs. Pintec Technology Holdings | Hitachi Metals vs. Volaris | Hitachi Metals vs. Artisan Partners Asset |
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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