Correlation Between Dow Jones and NGK Insulators
Can any of the company-specific risk be diversified away by investing in both Dow Jones and NGK Insulators 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 NGK Insulators 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 NGK Insulators, you can compare the effects of market volatilities on Dow Jones and NGK Insulators 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 NGK Insulators. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and NGK Insulators.
Diversification Opportunities for Dow Jones and NGK Insulators
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and NGK is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and NGK Insulators in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NGK Insulators 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 NGK Insulators. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NGK Insulators has no effect on the direction of Dow Jones i.e., Dow Jones and NGK Insulators go up and down completely randomly.
Pair Corralation between Dow Jones and NGK Insulators
If you would invest 4,179,460 in Dow Jones Industrial on September 5, 2024 and sell it today you would earn a total of 321,944 from holding Dow Jones Industrial or generate 7.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dow Jones Industrial vs. NGK Insulators
Performance |
| Timeline |
Dow Jones and NGK Insulators Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
NGK Insulators
Pair trading matchups for NGK Insulators
Pair Trading with Dow Jones and NGK Insulators
The main advantage of trading using opposite Dow Jones and NGK Insulators positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, NGK Insulators 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 NGK Insulators will offset losses from the drop in NGK Insulators' long position.| Dow Jones vs. Shake Shack | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. Dave Busters Entertainment | Dow Jones vs. Meli Hotels International |
| NGK Insulators vs. Dear Cashmere Holding | NGK Insulators vs. Goff Corp | NGK Insulators vs. Wialan Technologies | NGK Insulators vs. Cgrowth Capital |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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