Correlation Between Dow Jones and Locorr Market
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Locorr Market 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 Locorr Market 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 Locorr Market Trend, you can compare the effects of market volatilities on Dow Jones and Locorr Market 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 Locorr Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Locorr Market.
Diversification Opportunities for Dow Jones and Locorr Market
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Locorr is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Locorr Market Trend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Locorr Market Trend 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 Locorr Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Locorr Market Trend has no effect on the direction of Dow Jones i.e., Dow Jones and Locorr Market go up and down completely randomly.
Pair Corralation between Dow Jones and Locorr Market
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.15 times more return on investment than Locorr Market. However, Dow Jones is 1.15 times more volatile than Locorr Market Trend. It trades about 0.33 of its potential returns per unit of risk. Locorr Market Trend is currently generating about -0.11 per unit of risk. If you would invest 4,263,520 in Dow Jones Industrial on November 9, 2024 and sell it today you would earn a total of 211,243 from holding Dow Jones Industrial or generate 4.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Locorr Market Trend
Performance |
| Timeline |
Dow Jones and Locorr Market Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Locorr Market Trend
Pair trading matchups for Locorr Market
Pair Trading with Dow Jones and Locorr Market
The main advantage of trading using opposite Dow Jones and Locorr Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Locorr Market 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 Locorr Market will offset losses from the drop in Locorr Market's long position.| Dow Jones vs. Douglas Emmett | Dow Jones vs. Todos Medical | Dow Jones vs. Eastern Co | Dow Jones vs. Merit Medical Systems |
| Locorr Market vs. Ab Bond Inflation | Locorr Market vs. Ab Bond Inflation | Locorr Market vs. Vanguard Telecommunication Services | Locorr Market vs. California Municipal Portfolio |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |