Correlation Between Dow Jones and New China
Can any of the company-specific risk be diversified away by investing in both Dow Jones and New China 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 New China 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 New China Life, you can compare the effects of market volatilities on Dow Jones and New China 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 New China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and New China.
Diversification Opportunities for Dow Jones and New China
Pay attention - limited upside
The 3 months correlation between Dow and New is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and New China Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New China Life 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 New China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New China Life has no effect on the direction of Dow Jones i.e., Dow Jones and New China go up and down completely randomly.
Pair Corralation between Dow Jones and New China
If you would invest 3,877,810 in Dow Jones Industrial on January 11, 2025 and sell it today you would earn a total of 81,556 from holding Dow Jones Industrial or generate 2.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.49% |
| Values | Daily Returns |
Dow Jones Industrial vs. New China Life
Performance |
| Timeline |
Dow Jones and New China Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
New China Life
Pair trading matchups for New China
Pair Trading with Dow Jones and New China
The main advantage of trading using opposite Dow Jones and New China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, New China 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 New China will offset losses from the drop in New China's long position.| Dow Jones vs. The Joint Corp | Dow Jones vs. Falcon Metals Limited | Dow Jones vs. VirnetX Holding Corp | Dow Jones vs. Western Copper and |
| New China vs. BAKED GAMES SA | New China vs. BRAGG GAMING GRP | New China vs. Luckin Coffee | New China vs. BJs Restaurants |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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