Correlation Between Dow Jones and Aeye
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Aeye 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 Aeye 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 Aeye Inc, you can compare the effects of market volatilities on Dow Jones and Aeye 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 Aeye. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Aeye.
Diversification Opportunities for Dow Jones and Aeye
Very good diversification
The 3 months correlation between Dow and Aeye is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Aeye Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeye Inc 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 Aeye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeye Inc has no effect on the direction of Dow Jones i.e., Dow Jones and Aeye go up and down completely randomly.
Pair Corralation between Dow Jones and Aeye
Assuming the 90 days trading horizon Dow Jones is expected to generate 44.19 times less return on investment than Aeye. But when comparing it to its historical volatility, Dow Jones Industrial is 12.94 times less risky than Aeye. It trades about 0.07 of its potential returns per unit of risk. Aeye Inc is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 95.00 in Aeye Inc on September 18, 2024 and sell it today you would earn a total of 35.00 from holding Aeye Inc or generate 36.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Dow Jones Industrial vs. Aeye Inc
Performance |
| Timeline |
Dow Jones and Aeye Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Aeye Inc
Pair trading matchups for Aeye
Pair Trading with Dow Jones and Aeye
The main advantage of trading using opposite Dow Jones and Aeye positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Aeye 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 Aeye will offset losses from the drop in Aeye's long position.| Dow Jones vs. Commonwealth Bank of | Dow Jones vs. AmTrust Financial Services | Dow Jones vs. Forsys Metals Corp | Dow Jones vs. Juniata Valley Financial |
| Aeye vs. Innoviz Technologies | Aeye vs. Luminar Technologies | Aeye vs. Quantumscape Corp | Aeye vs. Hyliion Holdings Corp |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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