Correlation Between Dow Jones and Manitowoc
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Manitowoc 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 Manitowoc 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 Manitowoc, you can compare the effects of market volatilities on Dow Jones and Manitowoc 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 Manitowoc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Manitowoc.
Diversification Opportunities for Dow Jones and Manitowoc
Poor diversification
The 3 months correlation between Dow and Manitowoc is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Manitowoc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manitowoc 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 Manitowoc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manitowoc has no effect on the direction of Dow Jones i.e., Dow Jones and Manitowoc go up and down completely randomly.
Pair Corralation between Dow Jones and Manitowoc
Assuming the 90 days trading horizon Dow Jones is expected to generate 2.42 times less return on investment than Manitowoc. But when comparing it to its historical volatility, Dow Jones Industrial is 3.88 times less risky than Manitowoc. It trades about 0.12 of its potential returns per unit of risk. Manitowoc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 890.00 in Manitowoc on November 1, 2024 and sell it today you would earn a total of 116.00 from holding Manitowoc or generate 13.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Manitowoc
Performance |
| Timeline |
Dow Jones and Manitowoc Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Manitowoc
Pair trading matchups for Manitowoc
Pair Trading with Dow Jones and Manitowoc
The main advantage of trading using opposite Dow Jones and Manitowoc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Manitowoc 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 Manitowoc will offset losses from the drop in Manitowoc's long position.| Dow Jones vs. Boston Properties | Dow Jones vs. Suntory Beverage Food | Dow Jones vs. Envista Holdings Corp | Dow Jones vs. Fevertree Drinks Plc |
| Manitowoc vs. Oshkosh | Manitowoc vs. Alamo Group | Manitowoc vs. Wabash National | Manitowoc vs. Hyster Yale Materials Handling |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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