Correlation Between Dow Jones and Peak Bancorp
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Peak 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 Peak 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 Peak Bancorp, you can compare the effects of market volatilities on Dow Jones and Peak 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 Peak Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Peak Bancorp.
Diversification Opportunities for Dow Jones and Peak Bancorp
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Dow and Peak is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Peak Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peak 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 Peak Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peak Bancorp has no effect on the direction of Dow Jones i.e., Dow Jones and Peak Bancorp go up and down completely randomly.
Pair Corralation between Dow Jones and Peak Bancorp
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.57 times more return on investment than Peak Bancorp. However, Dow Jones Industrial is 1.75 times less risky than Peak Bancorp. It trades about 0.1 of its potential returns per unit of risk. Peak Bancorp is currently generating about -0.44 per unit of risk. If you would invest 3,522,518 in Dow Jones Industrial on September 12, 2024 and sell it today you would earn a total of 902,265 from holding Dow Jones Industrial or generate 25.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 1.14% |
| Values | Daily Returns |
Dow Jones Industrial vs. Peak Bancorp
Performance |
| Timeline |
Dow Jones and Peak Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Peak Bancorp
Pair trading matchups for Peak Bancorp
Pair Trading with Dow Jones and Peak Bancorp
The main advantage of trading using opposite Dow Jones and Peak Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Peak 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 Peak Bancorp will offset losses from the drop in Peak Bancorp's long position.| Dow Jones vs. Aeye Inc | Dow Jones vs. Gentex | Dow Jones vs. Marine Products | Dow Jones vs. CarsalesCom Ltd ADR |
| Peak Bancorp vs. MVB Financial Corp | Peak Bancorp vs. Finward Bancorp | Peak Bancorp vs. First Community | Peak 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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