Correlation Between Dow Jones and Logility Supply
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Logility Supply 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 Logility Supply 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 Logility Supply Chain, you can compare the effects of market volatilities on Dow Jones and Logility Supply 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 Logility Supply. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Logility Supply.
Diversification Opportunities for Dow Jones and Logility Supply
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dow and Logility is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Logility Supply Chain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Logility Supply Chain 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 Logility Supply. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Logility Supply Chain has no effect on the direction of Dow Jones i.e., Dow Jones and Logility Supply go up and down completely randomly.
Pair Corralation between Dow Jones and Logility Supply
Assuming the 90 days trading horizon Dow Jones is expected to generate 5.53 times less return on investment than Logility Supply. But when comparing it to its historical volatility, Dow Jones Industrial is 7.48 times less risky than Logility Supply. It trades about 0.33 of its potential returns per unit of risk. Logility Supply Chain is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,100 in Logility Supply Chain on November 3, 2024 and sell it today you would earn a total of 312.00 from holding Logility Supply Chain or generate 28.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Logility Supply Chain
Performance |
| Timeline |
Dow Jones and Logility Supply Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Logility Supply Chain
Pair trading matchups for Logility Supply
Pair Trading with Dow Jones and Logility Supply
The main advantage of trading using opposite Dow Jones and Logility Supply positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Logility Supply 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 Logility Supply will offset losses from the drop in Logility Supply's long position.| Dow Jones vs. Rambler Metals and | Dow Jones vs. Nicola Mining | Dow Jones vs. Old Dominion Freight | Dow Jones vs. United Guardian |
| Logility Supply vs. Commonwealth Bank of | Logility Supply vs. Philip Morris International | Logility Supply vs. Molson Coors Brewing | Logility Supply vs. Altria Group |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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