Correlation Between Dow Jones and LINCOLN EDUCATSERVICES
Can any of the company-specific risk be diversified away by investing in both Dow Jones and LINCOLN EDUCATSERVICES 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 LINCOLN EDUCATSERVICES 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 LINCOLN EDUCATSERVICES, you can compare the effects of market volatilities on Dow Jones and LINCOLN EDUCATSERVICES 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 LINCOLN EDUCATSERVICES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and LINCOLN EDUCATSERVICES.
Diversification Opportunities for Dow Jones and LINCOLN EDUCATSERVICES
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and LINCOLN is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and LINCOLN EDUCATSERVICES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LINCOLN EDUCATSERVICES 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 LINCOLN EDUCATSERVICES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LINCOLN EDUCATSERVICES has no effect on the direction of Dow Jones i.e., Dow Jones and LINCOLN EDUCATSERVICES go up and down completely randomly.
Pair Corralation between Dow Jones and LINCOLN EDUCATSERVICES
Assuming the 90 days trading horizon Dow Jones is expected to generate 3.47 times less return on investment than LINCOLN EDUCATSERVICES. But when comparing it to its historical volatility, Dow Jones Industrial is 4.06 times less risky than LINCOLN EDUCATSERVICES. It trades about 0.12 of its potential returns per unit of risk. LINCOLN EDUCATSERVICES is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 620.00 in LINCOLN EDUCATSERVICES on August 31, 2024 and sell it today you would earn a total of 880.00 from holding LINCOLN EDUCATSERVICES or generate 141.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.94% |
| Values | Daily Returns |
Dow Jones Industrial vs. LINCOLN EDUCATSERVICES
Performance |
| Timeline |
Dow Jones and LINCOLN EDUCATSERVICES Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
LINCOLN EDUCATSERVICES
Pair trading matchups for LINCOLN EDUCATSERVICES
Pair Trading with Dow Jones and LINCOLN EDUCATSERVICES
The main advantage of trading using opposite Dow Jones and LINCOLN EDUCATSERVICES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, LINCOLN EDUCATSERVICES 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 LINCOLN EDUCATSERVICES will offset losses from the drop in LINCOLN EDUCATSERVICES's long position.| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
| LINCOLN EDUCATSERVICES vs. Burlington Stores | LINCOLN EDUCATSERVICES vs. Gol Intelligent Airlines | LINCOLN EDUCATSERVICES vs. GEELY AUTOMOBILE | LINCOLN EDUCATSERVICES vs. SOUTHWEST AIRLINES |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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