Correlation Between Dow Jones and Leuthold E
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Leuthold E 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 Leuthold E 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 Leuthold E Investment, you can compare the effects of market volatilities on Dow Jones and Leuthold E 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 Leuthold E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Leuthold E.
Diversification Opportunities for Dow Jones and Leuthold E
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dow and Leuthold is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Leuthold E Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leuthold E Investment 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 Leuthold E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leuthold E Investment has no effect on the direction of Dow Jones i.e., Dow Jones and Leuthold E go up and down completely randomly.
Pair Corralation between Dow Jones and Leuthold E
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.25 times more return on investment than Leuthold E. However, Dow Jones is 1.25 times more volatile than Leuthold E Investment. It trades about 0.02 of its potential returns per unit of risk. Leuthold E Investment is currently generating about -0.18 per unit of risk. If you would invest 4,375,086 in Dow Jones Industrial on September 15, 2024 and sell it today you would earn a total of 7,720 from holding Dow Jones Industrial or generate 0.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Leuthold E Investment
Performance |
| Timeline |
Dow Jones and Leuthold E Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Leuthold E Investment
Pair trading matchups for Leuthold E
Pair Trading with Dow Jones and Leuthold E
The main advantage of trading using opposite Dow Jones and Leuthold E positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Leuthold E 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 Leuthold E will offset losses from the drop in Leuthold E's long position.| Dow Jones vs. Wallbox NV | Dow Jones vs. LithiumBank Resources Corp | Dow Jones vs. Marine Products | Dow Jones vs. Arrow Financial |
| Leuthold E vs. Leuthold E Investment | Leuthold E vs. Hotchkis Wiley Small | Leuthold E vs. Calvert Moderate Allocation | Leuthold E vs. Hotchkis Wiley Value |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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