Correlation Between Dow Jones and Northern Graphite
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Northern Graphite 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 Northern Graphite 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 Northern Graphite, you can compare the effects of market volatilities on Dow Jones and Northern Graphite 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 Northern Graphite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Northern Graphite.
Diversification Opportunities for Dow Jones and Northern Graphite
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Northern is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Northern Graphite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Graphite 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 Northern Graphite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Graphite has no effect on the direction of Dow Jones i.e., Dow Jones and Northern Graphite go up and down completely randomly.
Pair Corralation between Dow Jones and Northern Graphite
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.1 times more return on investment than Northern Graphite. However, Dow Jones Industrial is 10.04 times less risky than Northern Graphite. It trades about 0.33 of its potential returns per unit of risk. Northern Graphite is currently generating about -0.1 per unit of risk. If you would invest 4,263,520 in Dow Jones Industrial on November 9, 2024 and sell it today you would earn a total of 211,243 from holding Dow Jones Industrial or generate 4.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Northern Graphite
Performance |
| Timeline |
Dow Jones and Northern Graphite Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Northern Graphite
Pair trading matchups for Northern Graphite
Pair Trading with Dow Jones and Northern Graphite
The main advantage of trading using opposite Dow Jones and Northern Graphite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Northern Graphite 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 Northern Graphite will offset losses from the drop in Northern Graphite's long position.| Dow Jones vs. Douglas Emmett | Dow Jones vs. Todos Medical | Dow Jones vs. Eastern Co | Dow Jones vs. Merit Medical Systems |
| Northern Graphite vs. Focus Graphite | Northern Graphite vs. Mason Graphite | Northern Graphite vs. Graphite One | Northern Graphite vs. Syrah Resources Limited |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |