Correlation Between Dow Jones and Medical Packaging
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Medical Packaging 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 Medical Packaging 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 Medical Packaging, you can compare the effects of market volatilities on Dow Jones and Medical Packaging 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 Medical Packaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Medical Packaging.
Diversification Opportunities for Dow Jones and Medical Packaging
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Medical is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Medical Packaging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Packaging 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 Medical Packaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Packaging has no effect on the direction of Dow Jones i.e., Dow Jones and Medical Packaging go up and down completely randomly.
Pair Corralation between Dow Jones and Medical Packaging
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.34 times more return on investment than Medical Packaging. However, Dow Jones Industrial is 2.96 times less risky than Medical Packaging. It trades about 0.05 of its potential returns per unit of risk. Medical Packaging is currently generating about -0.29 per unit of risk. If you would invest 4,391,098 in Dow Jones Industrial on September 13, 2024 and sell it today you would earn a total of 23,758 from holding Dow Jones Industrial or generate 0.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 85.71% |
| Values | Daily Returns |
Dow Jones Industrial vs. Medical Packaging
Performance |
| Timeline |
Dow Jones and Medical Packaging Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Medical Packaging
Pair trading matchups for Medical Packaging
Pair Trading with Dow Jones and Medical Packaging
The main advantage of trading using opposite Dow Jones and Medical Packaging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Medical Packaging 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 Medical Packaging will offset losses from the drop in Medical Packaging's long position.| Dow Jones vs. ChampionX | Dow Jones vs. Highway Holdings Limited | Dow Jones vs. Westinghouse Air Brake | Dow Jones vs. Cementos Pacasmayo SAA |
| Medical Packaging vs. Orascom Financial Holding | Medical Packaging vs. Misr National Steel | Medical Packaging vs. Commercial International Bank Egypt | Medical Packaging vs. Fawry For Banking |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |