Correlation Between Dow Jones and Impala Platinum
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Impala Platinum 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 Impala Platinum 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 Impala Platinum Holdings, you can compare the effects of market volatilities on Dow Jones and Impala Platinum 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 Impala Platinum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Impala Platinum.
Diversification Opportunities for Dow Jones and Impala Platinum
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dow and Impala is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Impala Platinum Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impala Platinum Holdings 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 Impala Platinum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impala Platinum Holdings has no effect on the direction of Dow Jones i.e., Dow Jones and Impala Platinum go up and down completely randomly.
Pair Corralation between Dow Jones and Impala Platinum
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.32 times more return on investment than Impala Platinum. However, Dow Jones Industrial is 3.09 times less risky than Impala Platinum. It trades about -0.18 of its potential returns per unit of risk. Impala Platinum Holdings is currently generating about -0.18 per unit of risk. If you would invest 4,442,191 in Dow Jones Industrial on December 4, 2024 and sell it today you would lose (123,067) from holding Dow Jones Industrial or give up 2.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Impala Platinum Holdings
Performance |
| Timeline |
Dow Jones and Impala Platinum Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Impala Platinum Holdings
Pair trading matchups for Impala Platinum
Pair Trading with Dow Jones and Impala Platinum
The main advantage of trading using opposite Dow Jones and Impala Platinum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Impala Platinum 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 Impala Platinum will offset losses from the drop in Impala Platinum's long position.| Dow Jones vs. Balchem | ||
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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