Correlation Between Dow Jones and Nicola Mining
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Nicola 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 Nicola 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 Nicola Mining, you can compare the effects of market volatilities on Dow Jones and Nicola 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 Nicola Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Nicola Mining.
Diversification Opportunities for Dow Jones and Nicola Mining
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Nicola is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Nicola Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nicola 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 Nicola Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nicola Mining has no effect on the direction of Dow Jones i.e., Dow Jones and Nicola Mining go up and down completely randomly.
Pair Corralation between Dow Jones and Nicola Mining
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.15 times more return on investment than Nicola Mining. However, Dow Jones Industrial is 6.72 times less risky than Nicola Mining. It trades about 0.05 of its potential returns per unit of risk. Nicola Mining is currently generating about -0.02 per unit of risk. If you would invest 4,372,993 in Dow Jones Industrial on November 6, 2024 and sell it today you would earn a total of 82,611 from holding Dow Jones Industrial or generate 1.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 75.41% |
| Values | Daily Returns |
Dow Jones Industrial vs. Nicola Mining
Performance |
| Timeline |
Dow Jones and Nicola Mining Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Nicola Mining
Pair trading matchups for Nicola Mining
Pair Trading with Dow Jones and Nicola Mining
The main advantage of trading using opposite Dow Jones and Nicola Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Nicola 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 Nicola Mining will offset losses from the drop in Nicola Mining's long position.| Dow Jones vs. Mako Mining Corp | Dow Jones vs. Reyna Silver Corp | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. Trupanion |
| Nicola Mining vs. Hannan Metals | Nicola Mining vs. Atco Mining | Nicola Mining vs. Leading Edge Materials | Nicola Mining vs. Arianne Phosphate |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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