Correlation Between Dow Jones and LianDi Clean
Can any of the company-specific risk be diversified away by investing in both Dow Jones and LianDi Clean 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 LianDi Clean 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 LianDi Clean Technology, you can compare the effects of market volatilities on Dow Jones and LianDi Clean 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 LianDi Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and LianDi Clean.
Diversification Opportunities for Dow Jones and LianDi Clean
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dow and LianDi is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and LianDi Clean Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LianDi Clean Technology 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 LianDi Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LianDi Clean Technology has no effect on the direction of Dow Jones i.e., Dow Jones and LianDi Clean go up and down completely randomly.
Pair Corralation between Dow Jones and LianDi Clean
If you would invest 4,238,757 in Dow Jones Industrial on October 26, 2024 and sell it today you would earn a total of 217,750 from holding Dow Jones Industrial or generate 5.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Dow Jones Industrial vs. LianDi Clean Technology
Performance |
| Timeline |
Dow Jones and LianDi Clean Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
LianDi Clean Technology
Pair trading matchups for LianDi Clean
Pair Trading with Dow Jones and LianDi Clean
The main advantage of trading using opposite Dow Jones and LianDi Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, LianDi Clean 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 LianDi Clean will offset losses from the drop in LianDi Clean's long position.| Dow Jones vs. Asure Software | Dow Jones vs. Amkor Technology | Dow Jones vs. Radcom | Dow Jones vs. Senmiao Technology |
| LianDi Clean vs. Enerflex | LianDi Clean vs. Natural Gas Services | LianDi Clean vs. Archrock | LianDi Clean vs. Geospace Technologies |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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