Correlation Between Dow Jones and MTN GHANA
Can any of the company-specific risk be diversified away by investing in both Dow Jones and MTN GHANA 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 MTN GHANA 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 MTN GHANA LTD, you can compare the effects of market volatilities on Dow Jones and MTN GHANA 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 MTN GHANA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and MTN GHANA.
Diversification Opportunities for Dow Jones and MTN GHANA
Very weak diversification
The 3 months correlation between Dow and MTN is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and MTN GHANA LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTN GHANA LTD 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 MTN GHANA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTN GHANA LTD has no effect on the direction of Dow Jones i.e., Dow Jones and MTN GHANA go up and down completely randomly.
Pair Corralation between Dow Jones and MTN GHANA
Assuming the 90 days trading horizon Dow Jones is expected to generate 2.31 times less return on investment than MTN GHANA. But when comparing it to its historical volatility, Dow Jones Industrial is 2.2 times less risky than MTN GHANA. It trades about 0.11 of its potential returns per unit of risk. MTN GHANA LTD is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 125.00 in MTN GHANA LTD on August 31, 2024 and sell it today you would earn a total of 112.00 from holding MTN GHANA LTD or generate 89.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.75% |
| Values | Daily Returns |
Dow Jones Industrial vs. MTN GHANA LTD
Performance |
| Timeline |
Dow Jones and MTN GHANA Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
MTN GHANA LTD
Pair trading matchups for MTN GHANA
Pair Trading with Dow Jones and MTN GHANA
The main advantage of trading using opposite Dow Jones and MTN GHANA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, MTN GHANA 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 MTN GHANA will offset losses from the drop in MTN GHANA's long position.| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
| MTN GHANA vs. ACCESS BANK GHANA | MTN GHANA vs. DIGICUT ADVERTISING PRODUCTION | MTN GHANA vs. REPUBLIC BANK LIMITED | MTN GHANA vs. SIC INSURANCE ANY |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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