Correlation Between Dow Jones and Major Cineplex
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Major Cineplex 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 Major Cineplex 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 Major Cineplex Lifestyle, you can compare the effects of market volatilities on Dow Jones and Major Cineplex 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 Major Cineplex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Major Cineplex.
Diversification Opportunities for Dow Jones and Major Cineplex
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dow and Major is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Major Cineplex Lifestyle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Major Cineplex Lifestyle 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 Major Cineplex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Major Cineplex Lifestyle has no effect on the direction of Dow Jones i.e., Dow Jones and Major Cineplex go up and down completely randomly.
Pair Corralation between Dow Jones and Major Cineplex
Assuming the 90 days trading horizon Dow Jones is expected to generate 60.63 times less return on investment than Major Cineplex. But when comparing it to its historical volatility, Dow Jones Industrial is 117.75 times less risky than Major Cineplex. It trades about 0.16 of its potential returns per unit of risk. Major Cineplex Lifestyle is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 382.00 in Major Cineplex Lifestyle on September 2, 2024 and sell it today you would earn a total of 44.00 from holding Major Cineplex Lifestyle or generate 11.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Dow Jones Industrial vs. Major Cineplex Lifestyle
Performance |
| Timeline |
Dow Jones and Major Cineplex Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Major Cineplex Lifestyle
Pair trading matchups for Major Cineplex
Pair Trading with Dow Jones and Major Cineplex
The main advantage of trading using opposite Dow Jones and Major Cineplex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Major Cineplex 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 Major Cineplex will offset losses from the drop in Major Cineplex's long position.| Dow Jones vs. Dream Finders Homes | Dow Jones vs. GEN Restaurant Group, | Dow Jones vs. National Beverage Corp | Dow Jones vs. BJs Restaurants |
| Major Cineplex vs. LH Shopping Centers | Major Cineplex vs. Land and Houses | Major Cineplex vs. Quality Houses Property | Major Cineplex vs. Impact Growth REIT |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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