Correlation Between Dow Jones and Nano Labs
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Nano Labs 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 Nano Labs 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 Nano Labs, you can compare the effects of market volatilities on Dow Jones and Nano Labs 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 Nano Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Nano Labs.
Diversification Opportunities for Dow Jones and Nano Labs
Very weak diversification
The 3 months correlation between Dow and Nano is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Nano Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nano Labs 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 Nano Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nano Labs has no effect on the direction of Dow Jones i.e., Dow Jones and Nano Labs go up and down completely randomly.
Pair Corralation between Dow Jones and Nano Labs
Assuming the 90 days trading horizon Dow Jones is expected to generate 21.37 times less return on investment than Nano Labs. But when comparing it to its historical volatility, Dow Jones Industrial is 37.63 times less risky than Nano Labs. It trades about 0.27 of its potential returns per unit of risk. Nano Labs is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 606.00 in Nano Labs on August 30, 2024 and sell it today you would earn a total of 250.00 from holding Nano Labs or generate 41.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Nano Labs
Performance |
| Timeline |
Dow Jones and Nano Labs Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Nano Labs
Pair trading matchups for Nano Labs
Pair Trading with Dow Jones and Nano Labs
The main advantage of trading using opposite Dow Jones and Nano Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Nano Labs 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 Nano Labs will offset losses from the drop in Nano Labs' long position.| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
| Nano Labs vs. SEALSQ Corp | Nano Labs vs. GSI Technology | Nano Labs vs. SemiLEDS | Nano Labs vs. ChipMOS Technologies |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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