Correlation Between Dow Jones and JT ARCH
Can any of the company-specific risk be diversified away by investing in both Dow Jones and JT ARCH 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 JT ARCH 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 JT ARCH INVESTMENTS, you can compare the effects of market volatilities on Dow Jones and JT ARCH 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 JT ARCH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and JT ARCH.
Diversification Opportunities for Dow Jones and JT ARCH
Poor diversification
The 3 months correlation between Dow and JTINA is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and JT ARCH INVESTMENTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JT ARCH INVESTMENTS 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 JT ARCH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JT ARCH INVESTMENTS has no effect on the direction of Dow Jones i.e., Dow Jones and JT ARCH go up and down completely randomly.
Pair Corralation between Dow Jones and JT ARCH
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 2.55 times more return on investment than JT ARCH. However, Dow Jones is 2.55 times more volatile than JT ARCH INVESTMENTS. It trades about 0.11 of its potential returns per unit of risk. JT ARCH INVESTMENTS is currently generating about 0.2 per unit of risk. If you would invest 3,406,633 in Dow Jones Industrial on September 2, 2024 and sell it today you would earn a total of 1,084,432 from holding Dow Jones Industrial or generate 31.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 34.41% |
| Values | Daily Returns |
Dow Jones Industrial vs. JT ARCH INVESTMENTS
Performance |
| Timeline |
Dow Jones and JT ARCH Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
JT ARCH INVESTMENTS
Pair trading matchups for JT ARCH
Pair Trading with Dow Jones and JT ARCH
The main advantage of trading using opposite Dow Jones and JT ARCH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, JT ARCH 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 JT ARCH will offset losses from the drop in JT ARCH's long position.| Dow Jones vs. Dream Finders Homes | Dow Jones vs. GEN Restaurant Group, | Dow Jones vs. National Beverage Corp | Dow Jones vs. BJs Restaurants |
| JT ARCH vs. Vienna Insurance Group | JT ARCH vs. Moneta Money Bank | JT ARCH vs. UNIQA Insurance Group | JT ARCH vs. Komercni Banka AS |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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