Correlation Between Dow Jones and Metropolitan Steel
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Metropolitan Steel 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 Metropolitan Steel 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 Metropolitan Steel Corp, you can compare the effects of market volatilities on Dow Jones and Metropolitan Steel 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 Metropolitan Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Metropolitan Steel.
Diversification Opportunities for Dow Jones and Metropolitan Steel
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and Metropolitan is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Metropolitan Steel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan Steel Corp 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 Metropolitan Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan Steel Corp has no effect on the direction of Dow Jones i.e., Dow Jones and Metropolitan Steel go up and down completely randomly.
Pair Corralation between Dow Jones and Metropolitan Steel
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.24 times more return on investment than Metropolitan Steel. However, Dow Jones Industrial is 4.19 times less risky than Metropolitan Steel. It trades about 0.19 of its potential returns per unit of risk. Metropolitan Steel Corp is currently generating about -0.02 per unit of risk. If you would invest 4,329,703 in Dow Jones Industrial on October 26, 2024 and sell it today you would earn a total of 126,804 from holding Dow Jones Industrial or generate 2.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Metropolitan Steel Corp
Performance |
| Timeline |
Dow Jones and Metropolitan Steel Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Metropolitan Steel Corp
Pair trading matchups for Metropolitan Steel
Pair Trading with Dow Jones and Metropolitan Steel
The main advantage of trading using opposite Dow Jones and Metropolitan Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Metropolitan Steel 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 Metropolitan Steel will offset losses from the drop in Metropolitan Steel's long position.| Dow Jones vs. Asure Software | Dow Jones vs. Amkor Technology | Dow Jones vs. Radcom | Dow Jones vs. Senmiao Technology |
| Metropolitan Steel vs. Masood Textile Mills | Metropolitan Steel vs. Fauji Foods | Metropolitan Steel vs. KSB Pumps | Metropolitan Steel vs. Mari Petroleum |
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 Directory module to find actively traded commodities issued by global exchanges.
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