Correlation Between Dow Jones and Luminar Technologies
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Luminar Technologies 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 Luminar Technologies 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 Luminar Technologies, you can compare the effects of market volatilities on Dow Jones and Luminar Technologies 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 Luminar Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Luminar Technologies.
Diversification Opportunities for Dow Jones and Luminar Technologies
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and Luminar is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Luminar Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luminar Technologies 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 Luminar Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luminar Technologies has no effect on the direction of Dow Jones i.e., Dow Jones and Luminar Technologies go up and down completely randomly.
Pair Corralation between Dow Jones and Luminar Technologies
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.1 times more return on investment than Luminar Technologies. However, Dow Jones Industrial is 9.55 times less risky than Luminar Technologies. It trades about 0.12 of its potential returns per unit of risk. Luminar Technologies is currently generating about -0.05 per unit of risk. If you would invest 3,595,089 in Dow Jones Industrial on August 26, 2024 and sell it today you would earn a total of 834,562 from holding Dow Jones Industrial or generate 23.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Luminar Technologies
Performance |
| Timeline |
Dow Jones and Luminar Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Luminar Technologies
Pair trading matchups for Luminar Technologies
Pair Trading with Dow Jones and Luminar Technologies
The main advantage of trading using opposite Dow Jones and Luminar Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Luminar Technologies 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 Luminar Technologies will offset losses from the drop in Luminar Technologies' long position.| Dow Jones vs. MI Homes | Dow Jones vs. Franklin Street Properties | Dow Jones vs. Summit Hotel Properties | Dow Jones vs. Portillos |
| Luminar Technologies vs. Mobileye Global Class | Luminar Technologies vs. Hyliion Holdings Corp | Luminar Technologies vs. Aeva Technologies | Luminar Technologies vs. Innoviz Technologies |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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