Correlation Between Dow Jones and LithiumBank Resources
Can any of the company-specific risk be diversified away by investing in both Dow Jones and LithiumBank Resources 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 LithiumBank Resources 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 LithiumBank Resources Corp, you can compare the effects of market volatilities on Dow Jones and LithiumBank Resources 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 LithiumBank Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and LithiumBank Resources.
Diversification Opportunities for Dow Jones and LithiumBank Resources
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Dow and LithiumBank is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and LithiumBank Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LithiumBank Resources 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 LithiumBank Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LithiumBank Resources has no effect on the direction of Dow Jones i.e., Dow Jones and LithiumBank Resources go up and down completely randomly.
Pair Corralation between Dow Jones and LithiumBank Resources
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.16 times more return on investment than LithiumBank Resources. However, Dow Jones Industrial is 6.31 times less risky than LithiumBank Resources. It trades about 0.08 of its potential returns per unit of risk. LithiumBank Resources Corp is currently generating about -0.02 per unit of risk. If you would invest 3,400,504 in Dow Jones Industrial on September 2, 2024 and sell it today you would earn a total of 1,090,561 from holding Dow Jones Industrial or generate 32.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. LithiumBank Resources Corp
Performance |
| Timeline |
Dow Jones and LithiumBank Resources Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
LithiumBank Resources Corp
Pair trading matchups for LithiumBank Resources
Pair Trading with Dow Jones and LithiumBank Resources
The main advantage of trading using opposite Dow Jones and LithiumBank Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, LithiumBank Resources 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 LithiumBank Resources will offset losses from the drop in LithiumBank Resources' 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 |
| LithiumBank Resources vs. Canaf Investments | LithiumBank Resources vs. Atrium Mortgage Investment | LithiumBank Resources vs. Westshore Terminals Investment | LithiumBank Resources vs. Jamieson Wellness |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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