Correlation Between Dow Jones and Ace Oldfields
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Ace Oldfields 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 Ace Oldfields 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 Ace Oldfields PT, you can compare the effects of market volatilities on Dow Jones and Ace Oldfields 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 Ace Oldfields. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Ace Oldfields.
Diversification Opportunities for Dow Jones and Ace Oldfields
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Ace is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Ace Oldfields PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ace Oldfields PT 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 Ace Oldfields. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ace Oldfields PT has no effect on the direction of Dow Jones i.e., Dow Jones and Ace Oldfields go up and down completely randomly.
Pair Corralation between Dow Jones and Ace Oldfields
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.51 times more return on investment than Ace Oldfields. However, Dow Jones Industrial is 1.96 times less risky than Ace Oldfields. It trades about 0.1 of its potential returns per unit of risk. Ace Oldfields PT is currently generating about 0.01 per unit of risk. If you would invest 3,899,639 in Dow Jones Industrial on August 27, 2024 and sell it today you would earn a total of 530,012 from holding Dow Jones Industrial or generate 13.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 93.62% |
| Values | Daily Returns |
Dow Jones Industrial vs. Ace Oldfields PT
Performance |
| Timeline |
Dow Jones and Ace Oldfields Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Ace Oldfields PT
Pair trading matchups for Ace Oldfields
Pair Trading with Dow Jones and Ace Oldfields
The main advantage of trading using opposite Dow Jones and Ace Oldfields positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Ace Oldfields 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 Ace Oldfields will offset losses from the drop in Ace Oldfields' long position.| Dow Jones vs. MI Homes | Dow Jones vs. Franklin Street Properties | Dow Jones vs. Summit Hotel Properties | Dow Jones vs. Portillos |
| Ace Oldfields vs. Ladangbaja Murni PT | Ace Oldfields vs. PT Hasnur Internasional | Ace Oldfields vs. Geoprima Solusi Tbk | Ace Oldfields vs. Prima Andalan Mandiri |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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