Correlation Between Dow Jones and JEMTEC
Can any of the company-specific risk be diversified away by investing in both Dow Jones and JEMTEC 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 JEMTEC 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 JEMTEC Inc, you can compare the effects of market volatilities on Dow Jones and JEMTEC 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 JEMTEC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and JEMTEC.
Diversification Opportunities for Dow Jones and JEMTEC
Excellent diversification
The 3 months correlation between Dow and JEMTEC is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and JEMTEC Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JEMTEC Inc 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 JEMTEC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JEMTEC Inc has no effect on the direction of Dow Jones i.e., Dow Jones and JEMTEC go up and down completely randomly.
Pair Corralation between Dow Jones and JEMTEC
Assuming the 90 days trading horizon Dow Jones is expected to generate 2.77 times less return on investment than JEMTEC. But when comparing it to its historical volatility, Dow Jones Industrial is 4.32 times less risky than JEMTEC. It trades about 0.06 of its potential returns per unit of risk. JEMTEC Inc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 70.00 in JEMTEC Inc on December 4, 2024 and sell it today you would earn a total of 14.00 from holding JEMTEC Inc or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. JEMTEC Inc
Performance |
| Timeline |
Dow Jones and JEMTEC Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
JEMTEC Inc
Pair trading matchups for JEMTEC
Pair Trading with Dow Jones and JEMTEC
The main advantage of trading using opposite Dow Jones and JEMTEC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, JEMTEC 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 JEMTEC will offset losses from the drop in JEMTEC's long position.| Dow Jones vs. Balchem | Dow Jones vs. Merit Medical Systems | Dow Jones vs. American Vanguard | Dow Jones vs. Regeneron Pharmaceuticals |
| JEMTEC vs. Sun Peak Metals | JEMTEC vs. Farstarcap Investment Corp | JEMTEC vs. Atrium Mortgage Investment | JEMTEC vs. Economic Investment Trust |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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