Correlation Between Dow Jones and Maxar Technologies
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Maxar Technologies 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 Maxar Technologies 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 Maxar Technologies, you can compare the effects of market volatilities on Dow Jones and Maxar Technologies 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 Maxar Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Maxar Technologies.
Diversification Opportunities for Dow Jones and Maxar Technologies
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dow and Maxar is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Maxar Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maxar 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 Maxar Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maxar Technologies has no effect on the direction of Dow Jones i.e., Dow Jones and Maxar Technologies go up and down completely randomly.
Pair Corralation between Dow Jones and Maxar Technologies
Assuming the 90 days trading horizon Dow Jones is expected to generate 22.05 times less return on investment than Maxar Technologies. But when comparing it to its historical volatility, Dow Jones Industrial is 17.68 times less risky than Maxar Technologies. It trades about 0.08 of its potential returns per unit of risk. Maxar Technologies is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,404 in Maxar Technologies on September 4, 2024 and sell it today you would earn a total of 2,895 from holding Maxar Technologies or generate 120.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 19.39% |
| Values | Daily Returns |
Dow Jones Industrial vs. Maxar Technologies
Performance |
| Timeline |
Dow Jones and Maxar Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Maxar Technologies
Pair trading matchups for Maxar Technologies
Pair Trading with Dow Jones and Maxar Technologies
The main advantage of trading using opposite Dow Jones and Maxar Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Maxar Technologies 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 Maxar Technologies will offset losses from the drop in Maxar Technologies' long position.| Dow Jones vs. Gentex | Dow Jones vs. American Axle Manufacturing | Dow Jones vs. Pearson PLC ADR | Dow Jones vs. Marine Products |
| Maxar Technologies vs. Comtech Telecommunications Corp | Maxar Technologies vs. NETGEAR | Maxar Technologies vs. KVH Industries | Maxar Technologies vs. Silicom |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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