Correlation Between Dow Jones and Mint
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Mint 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 Mint 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 The Mint, you can compare the effects of market volatilities on Dow Jones and Mint 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 Mint. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Mint.
Diversification Opportunities for Dow Jones and Mint
Very good diversification
The 3 months correlation between Dow and Mint is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and The Mint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mint 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 Mint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mint has no effect on the direction of Dow Jones i.e., Dow Jones and Mint go up and down completely randomly.
Pair Corralation between Dow Jones and Mint
Assuming the 90 days trading horizon Dow Jones is expected to generate 1495.45 times less return on investment than Mint. But when comparing it to its historical volatility, Dow Jones Industrial is 374.69 times less risky than Mint. It trades about 0.08 of its potential returns per unit of risk. The Mint is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 1.85 in The Mint on September 13, 2024 and sell it today you would lose (0.65) from holding The Mint or give up 35.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dow Jones Industrial vs. The Mint
Performance |
| Timeline |
Dow Jones and Mint Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
The Mint
Pair trading matchups for Mint
Pair Trading with Dow Jones and Mint
The main advantage of trading using opposite Dow Jones and Mint positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Mint 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 Mint will offset losses from the drop in Mint'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 |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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