Correlation Between Dow Jones and Ladenburg Thalmann
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Ladenburg Thalmann 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 Ladenburg Thalmann 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 Ladenburg Thalmann Financial, you can compare the effects of market volatilities on Dow Jones and Ladenburg Thalmann 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 Ladenburg Thalmann. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Ladenburg Thalmann.
Diversification Opportunities for Dow Jones and Ladenburg Thalmann
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Ladenburg is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Ladenburg Thalmann Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ladenburg Thalmann 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 Ladenburg Thalmann. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ladenburg Thalmann has no effect on the direction of Dow Jones i.e., Dow Jones and Ladenburg Thalmann go up and down completely randomly.
Pair Corralation between Dow Jones and Ladenburg Thalmann
Assuming the 90 days trading horizon Dow Jones is expected to generate 2.49 times less return on investment than Ladenburg Thalmann. But when comparing it to its historical volatility, Dow Jones Industrial is 2.87 times less risky than Ladenburg Thalmann. It trades about 0.08 of its potential returns per unit of risk. Ladenburg Thalmann Financial is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,015 in Ladenburg Thalmann Financial on September 13, 2024 and sell it today you would earn a total of 585.00 from holding Ladenburg Thalmann Financial or generate 57.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 72.73% |
| Values | Daily Returns |
Dow Jones Industrial vs. Ladenburg Thalmann Financial
Performance |
| Timeline |
Dow Jones and Ladenburg Thalmann Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Ladenburg Thalmann Financial
Pair trading matchups for Ladenburg Thalmann
Pair Trading with Dow Jones and Ladenburg Thalmann
The main advantage of trading using opposite Dow Jones and Ladenburg Thalmann positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Ladenburg Thalmann 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 Ladenburg Thalmann will offset losses from the drop in Ladenburg Thalmann's long position.| Dow Jones vs. ChampionX | Dow Jones vs. Highway Holdings Limited | Dow Jones vs. Westinghouse Air Brake | Dow Jones vs. Cementos Pacasmayo SAA |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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