Correlation Between Dow Jones and Hut 8
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Hut 8 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 Hut 8 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 Hut 8 Corp, you can compare the effects of market volatilities on Dow Jones and Hut 8 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 Hut 8. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Hut 8.
Diversification Opportunities for Dow Jones and Hut 8
Poor diversification
The 3 months correlation between Dow and Hut is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Hut 8 Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hut 8 Corp 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 Hut 8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hut 8 Corp has no effect on the direction of Dow Jones i.e., Dow Jones and Hut 8 go up and down completely randomly.
Pair Corralation between Dow Jones and Hut 8
Assuming the 90 days trading horizon Dow Jones is expected to generate 14.07 times less return on investment than Hut 8. But when comparing it to its historical volatility, Dow Jones Industrial is 8.47 times less risky than Hut 8. It trades about 0.19 of its potential returns per unit of risk. Hut 8 Corp is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 909.00 in Hut 8 Corp on August 31, 2024 and sell it today you would earn a total of 1,936 from holding Hut 8 Corp or generate 212.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Hut 8 Corp
Performance |
| Timeline |
Dow Jones and Hut 8 Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Hut 8 Corp
Pair trading matchups for Hut 8
Pair Trading with Dow Jones and Hut 8
The main advantage of trading using opposite Dow Jones and Hut 8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Hut 8 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 Hut 8 will offset losses from the drop in Hut 8'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 |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |