Correlation Between Dow Jones and Precigen
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Precigen 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 Precigen 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 Precigen, you can compare the effects of market volatilities on Dow Jones and Precigen 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 Precigen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Precigen.
Diversification Opportunities for Dow Jones and Precigen
Modest diversification
The 3 months correlation between Dow and Precigen is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Precigen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precigen 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 Precigen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precigen has no effect on the direction of Dow Jones i.e., Dow Jones and Precigen go up and down completely randomly.
Pair Corralation between Dow Jones and Precigen
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the Precigen. But the index apears to be less risky and, when comparing its historical volatility, Dow Jones Industrial is 11.11 times less risky than Precigen. The index trades about -0.21 of its potential returns per unit of risk. The Precigen is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 131.00 in Precigen on November 28, 2024 and sell it today you would earn a total of 36.00 from holding Precigen or generate 27.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Dow Jones Industrial vs. Precigen
Performance |
| Timeline |
Dow Jones and Precigen Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Dow Jones and Precigen
The main advantage of trading using opposite Dow Jones and Precigen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Precigen 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 Precigen will offset losses from the drop in Precigen's long position.| Dow Jones vs. Starbucks | Dow Jones vs. Westinghouse Air Brake | Dow Jones vs. Finnair Oyj | Dow Jones vs. Mesa Air Group |
| Precigen vs. Entravision Communications | Precigen vs. GungHo Online Entertainment | Precigen vs. Singapore Telecommunications Limited | Precigen vs. Chengdu PUTIAN Telecommunications |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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