Correlation Between Dow Jones and MultiChoice
Can any of the company-specific risk be diversified away by investing in both Dow Jones and MultiChoice 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 MultiChoice 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 MultiChoice Group, you can compare the effects of market volatilities on Dow Jones and MultiChoice 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 MultiChoice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and MultiChoice.
Diversification Opportunities for Dow Jones and MultiChoice
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and MultiChoice is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and MultiChoice Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MultiChoice Group 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 MultiChoice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MultiChoice Group has no effect on the direction of Dow Jones i.e., Dow Jones and MultiChoice go up and down completely randomly.
Pair Corralation between Dow Jones and MultiChoice
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.63 times more return on investment than MultiChoice. However, Dow Jones Industrial is 1.6 times less risky than MultiChoice. It trades about -0.16 of its potential returns per unit of risk. MultiChoice Group is currently generating about -0.17 per unit of risk. If you would invest 4,488,213 in Dow Jones Industrial on December 1, 2024 and sell it today you would lose (104,122) from holding Dow Jones Industrial or give up 2.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Dow Jones Industrial vs. MultiChoice Group
Performance |
| Timeline |
Dow Jones and MultiChoice Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
MultiChoice Group
Pair trading matchups for MultiChoice
Pair Trading with Dow Jones and MultiChoice
The main advantage of trading using opposite Dow Jones and MultiChoice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, MultiChoice 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 MultiChoice will offset losses from the drop in MultiChoice's long position.| Dow Jones vs. Cannae Holdings | Dow Jones vs. Fidus Investment Corp | Dow Jones vs. SEI Investments | Dow Jones vs. Cracker Barrel Old |
| MultiChoice vs. Copper 360 | MultiChoice vs. RCL Foods | MultiChoice vs. Capitec Bank Holdings | MultiChoice vs. eMedia Holdings Limited |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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