Correlation Between Dow Jones and MCAN Mortgage
Can any of the company-specific risk be diversified away by investing in both Dow Jones and MCAN Mortgage 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 MCAN Mortgage 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 MCAN Mortgage, you can compare the effects of market volatilities on Dow Jones and MCAN Mortgage 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 MCAN Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and MCAN Mortgage.
Diversification Opportunities for Dow Jones and MCAN Mortgage
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and MCAN is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and MCAN Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCAN Mortgage 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 MCAN Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCAN Mortgage has no effect on the direction of Dow Jones i.e., Dow Jones and MCAN Mortgage go up and down completely randomly.
Pair Corralation between Dow Jones and MCAN Mortgage
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.47 times less return on investment than MCAN Mortgage. But when comparing it to its historical volatility, Dow Jones Industrial is 1.26 times less risky than MCAN Mortgage. It trades about 0.16 of its potential returns per unit of risk. MCAN Mortgage is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,129 in MCAN Mortgage on September 3, 2024 and sell it today you would earn a total of 266.00 from holding MCAN Mortgage or generate 23.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.4% |
| Values | Daily Returns |
Dow Jones Industrial vs. MCAN Mortgage
Performance |
| Timeline |
Dow Jones and MCAN Mortgage Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
MCAN Mortgage
Pair trading matchups for MCAN Mortgage
Pair Trading with Dow Jones and MCAN Mortgage
The main advantage of trading using opposite Dow Jones and MCAN Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, MCAN Mortgage 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 MCAN Mortgage will offset losses from the drop in MCAN Mortgage's long position.| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
| MCAN Mortgage vs. Guild Holdings Co | MCAN Mortgage vs. Mr Cooper Group | MCAN Mortgage vs. Encore Capital Group | MCAN Mortgage vs. CNFinance Holdings |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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