Correlation Between Dow Jones and NCBA GROUP
Can any of the company-specific risk be diversified away by investing in both Dow Jones and NCBA GROUP 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 NCBA GROUP 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 NCBA GROUP PLC, you can compare the effects of market volatilities on Dow Jones and NCBA GROUP 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 NCBA GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and NCBA GROUP.
Diversification Opportunities for Dow Jones and NCBA GROUP
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dow and NCBA is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and NCBA GROUP PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NCBA GROUP PLC 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 NCBA GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NCBA GROUP PLC has no effect on the direction of Dow Jones i.e., Dow Jones and NCBA GROUP go up and down completely randomly.
Pair Corralation between Dow Jones and NCBA GROUP
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.38 times more return on investment than NCBA GROUP. However, Dow Jones Industrial is 2.63 times less risky than NCBA GROUP. It trades about 0.37 of its potential returns per unit of risk. NCBA GROUP PLC is currently generating about -0.04 per unit of risk. 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. NCBA GROUP PLC
Performance |
| Timeline |
Dow Jones and NCBA GROUP Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
NCBA GROUP PLC
Pair trading matchups for NCBA GROUP
Pair Trading with Dow Jones and NCBA GROUP
The main advantage of trading using opposite Dow Jones and NCBA GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, NCBA GROUP 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 NCBA GROUP will offset losses from the drop in NCBA GROUP's 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 |
| NCBA GROUP vs. EQUITY GROUP HOLDINGS | NCBA GROUP vs. BRITISH AMERICAN TOBACCO | NCBA GROUP vs. CO OPERATIVE BANK OF | NCBA GROUP vs. ABSA NEW GOLD |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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