Correlation Between Dow Jones and N Able
Can any of the company-specific risk be diversified away by investing in both Dow Jones and N Able 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 N Able 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 N Able Inc, you can compare the effects of market volatilities on Dow Jones and N Able 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 N Able. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and N Able.
Diversification Opportunities for Dow Jones and N Able
Pay attention - limited upside
The 3 months correlation between Dow and NABL is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and N Able Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on N Able Inc 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 N Able. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of N Able Inc has no effect on the direction of Dow Jones i.e., Dow Jones and N Able go up and down completely randomly.
Pair Corralation between Dow Jones and N Able
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.41 times more return on investment than N Able. However, Dow Jones Industrial is 2.44 times less risky than N Able. It trades about 0.12 of its potential returns per unit of risk. N Able Inc is currently generating about -0.04 per unit of risk. If you would invest 3,383,361 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 1,107,704 from holding Dow Jones Industrial or generate 32.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. N Able Inc
Performance |
| Timeline |
Dow Jones and N Able Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
N Able Inc
Pair trading matchups for N Able
Pair Trading with Dow Jones and N Able
The main advantage of trading using opposite Dow Jones and N Able positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, N Able 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 N Able will offset losses from the drop in N Able'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 |
| N Able vs. Innodata | N Able vs. International Business Machines | N Able vs. Aurora Innovation | N Able vs. BigBearai Holdings |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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