Correlation Between Dow Jones and Living Cell
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Living Cell 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 Living Cell 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 Living Cell Technologies, you can compare the effects of market volatilities on Dow Jones and Living Cell 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 Living Cell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Living Cell.
Diversification Opportunities for Dow Jones and Living Cell
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Living is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Living Cell Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Living Cell Technologies 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 Living Cell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Living Cell Technologies has no effect on the direction of Dow Jones i.e., Dow Jones and Living Cell go up and down completely randomly.
Pair Corralation between Dow Jones and Living Cell
Assuming the 90 days trading horizon Dow Jones is expected to generate 35.16 times less return on investment than Living Cell. But when comparing it to its historical volatility, Dow Jones Industrial is 63.8 times less risky than Living Cell. It trades about 0.08 of its potential returns per unit of risk. Living Cell Technologies is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1.48 in Living Cell Technologies on September 3, 2024 and sell it today you would lose (1.05) from holding Living Cell Technologies or give up 70.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Dow Jones Industrial vs. Living Cell Technologies
Performance |
| Timeline |
Dow Jones and Living Cell Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Living Cell Technologies
Pair trading matchups for Living Cell
Pair Trading with Dow Jones and Living Cell
The main advantage of trading using opposite Dow Jones and Living Cell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Living Cell 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 Living Cell will offset losses from the drop in Living Cell's long position.| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
| Living Cell vs. Microbot Medical | Living Cell vs. Park Hotels Resorts | Living Cell vs. The Cheesecake Factory | Living Cell vs. Cardinal Health |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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