Correlation Between Dow Jones and Hope Bancorp
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Hope Bancorp 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 Hope Bancorp 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 Hope Bancorp, you can compare the effects of market volatilities on Dow Jones and Hope Bancorp 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 Hope Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Hope Bancorp.
Diversification Opportunities for Dow Jones and Hope Bancorp
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dow and Hope is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Hope Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hope Bancorp 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 Hope Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hope Bancorp has no effect on the direction of Dow Jones i.e., Dow Jones and Hope Bancorp go up and down completely randomly.
Pair Corralation between Dow Jones and Hope Bancorp
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.65 times less return on investment than Hope Bancorp. But when comparing it to its historical volatility, Dow Jones Industrial is 3.73 times less risky than Hope Bancorp. It trades about 0.3 of its potential returns per unit of risk. Hope Bancorp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,240 in Hope Bancorp on August 31, 2024 and sell it today you would earn a total of 122.00 from holding Hope Bancorp or generate 9.84% 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. Hope Bancorp
Performance |
| Timeline |
Dow Jones and Hope Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Hope Bancorp
Pair trading matchups for Hope Bancorp
Pair Trading with Dow Jones and Hope Bancorp
The main advantage of trading using opposite Dow Jones and Hope Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Hope Bancorp 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 Hope Bancorp will offset losses from the drop in Hope Bancorp's long position.| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
| Hope Bancorp vs. OP Bancorp | Hope Bancorp vs. PCB Bancorp | Hope Bancorp vs. Financial Institutions | Hope Bancorp vs. LINKBANCORP |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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