Correlation Between Dow Jones and Melar Acquisition
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Melar Acquisition 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 Melar Acquisition 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 Melar Acquisition Corp, you can compare the effects of market volatilities on Dow Jones and Melar Acquisition 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 Melar Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Melar Acquisition.
Diversification Opportunities for Dow Jones and Melar Acquisition
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Melar is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Melar Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melar Acquisition Corp 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 Melar Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melar Acquisition Corp has no effect on the direction of Dow Jones i.e., Dow Jones and Melar Acquisition go up and down completely randomly.
Pair Corralation between Dow Jones and Melar Acquisition
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 4.8 times more return on investment than Melar Acquisition. However, Dow Jones is 4.8 times more volatile than Melar Acquisition Corp. It trades about 0.16 of its potential returns per unit of risk. Melar Acquisition Corp is currently generating about 0.05 per unit of risk. If you would invest 3,880,733 in Dow Jones Industrial on September 3, 2024 and sell it today you would earn a total of 610,332 from holding Dow Jones Industrial or generate 15.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 77.6% |
| Values | Daily Returns |
Dow Jones Industrial vs. Melar Acquisition Corp
Performance |
| Timeline |
Dow Jones and Melar Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Melar Acquisition Corp
Pair trading matchups for Melar Acquisition
Pair Trading with Dow Jones and Melar Acquisition
The main advantage of trading using opposite Dow Jones and Melar Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Melar Acquisition 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 Melar Acquisition will offset losses from the drop in Melar Acquisition's long position.| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
| Melar Acquisition vs. Alpha One | Melar Acquisition vs. Manaris Corp | Melar Acquisition vs. SCOR PK | Melar Acquisition vs. Aquagold International |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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