Correlation Between Dow Jones and Lexington Realty
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Lexington Realty 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 Lexington Realty 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 Lexington Realty Trust, you can compare the effects of market volatilities on Dow Jones and Lexington Realty 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 Lexington Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Lexington Realty.
Diversification Opportunities for Dow Jones and Lexington Realty
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Lexington is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Lexington Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lexington Realty Trust 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 Lexington Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lexington Realty Trust has no effect on the direction of Dow Jones i.e., Dow Jones and Lexington Realty go up and down completely randomly.
Pair Corralation between Dow Jones and Lexington Realty
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.42 times more return on investment than Lexington Realty. However, Dow Jones Industrial is 2.36 times less risky than Lexington Realty. It trades about 0.08 of its potential returns per unit of risk. Lexington Realty Trust is currently generating about 0.0 per unit of risk. If you would invest 3,418,997 in Dow Jones Industrial on September 3, 2024 and sell it today you would earn a total of 1,059,203 from holding Dow Jones Industrial or generate 30.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.14% |
| Values | Daily Returns |
Dow Jones Industrial vs. Lexington Realty Trust
Performance |
| Timeline |
Dow Jones and Lexington Realty Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Lexington Realty Trust
Pair trading matchups for Lexington Realty
Pair Trading with Dow Jones and Lexington Realty
The main advantage of trading using opposite Dow Jones and Lexington Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Lexington Realty 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 Lexington Realty will offset losses from the drop in Lexington Realty's long position.| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
| Lexington Realty vs. National Health Investors | Lexington Realty vs. LIFENET INSURANCE CO | Lexington Realty vs. The Hanover Insurance | Lexington Realty vs. Ares Management Corp |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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