Correlation Between Dow Jones and Lanka Milk
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By analyzing existing cross correlation between Dow Jones Industrial and Lanka Milk Foods, you can compare the effects of market volatilities on Dow Jones and Lanka Milk 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 Lanka Milk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Lanka Milk.
Diversification Opportunities for Dow Jones and Lanka Milk
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Lanka is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Lanka Milk Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lanka Milk Foods 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 Lanka Milk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lanka Milk Foods has no effect on the direction of Dow Jones i.e., Dow Jones and Lanka Milk go up and down completely randomly.
Pair Corralation between Dow Jones and Lanka Milk
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the Lanka Milk. But the index apears to be less risky and, when comparing its historical volatility, Dow Jones Industrial is 1.11 times less risky than Lanka Milk. The index trades about -0.12 of its potential returns per unit of risk. The Lanka Milk Foods is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4,160 in Lanka Milk Foods on January 18, 2025 and sell it today you would earn a total of 160.00 from holding Lanka Milk Foods or generate 3.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 86.36% |
| Values | Daily Returns |
Dow Jones Industrial vs. Lanka Milk Foods
Performance |
| Timeline |
Dow Jones and Lanka Milk Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Lanka Milk Foods
Pair trading matchups for Lanka Milk
Pair Trading with Dow Jones and Lanka Milk
The main advantage of trading using opposite Dow Jones and Lanka Milk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Lanka Milk 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 Lanka Milk will offset losses from the drop in Lanka Milk's long position.| Dow Jones vs. Texas Roadhouse | Dow Jones vs. The Wendys Co | Dow Jones vs. Stanley Black Decker | Dow Jones vs. Procter Gamble |
| Lanka Milk vs. Dolphin Hotels PLC | Lanka Milk vs. Nuwara Eliya Hotels | Lanka Milk vs. Renuka City Hotel | Lanka Milk vs. Palm Garden Hotels |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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