Correlation Between Dow Jones and NIIT
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By analyzing existing cross correlation between Dow Jones Industrial and NIIT Limited, you can compare the effects of market volatilities on Dow Jones and NIIT 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 NIIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and NIIT.
Diversification Opportunities for Dow Jones and NIIT
Very poor diversification
The 3 months correlation between Dow and NIIT is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and NIIT Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIIT Limited 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 NIIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIIT Limited has no effect on the direction of Dow Jones i.e., Dow Jones and NIIT go up and down completely randomly.
Pair Corralation between Dow Jones and NIIT
Assuming the 90 days trading horizon Dow Jones is expected to generate 2.11 times less return on investment than NIIT. But when comparing it to its historical volatility, Dow Jones Industrial is 6.72 times less risky than NIIT. It trades about 0.07 of its potential returns per unit of risk. NIIT Limited is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 30,057 in NIIT Limited on September 19, 2024 and sell it today you would lose (9,947) from holding NIIT Limited or give up 33.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.39% |
| Values | Daily Returns |
Dow Jones Industrial vs. NIIT Limited
Performance |
| Timeline |
Dow Jones and NIIT Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
NIIT Limited
Pair trading matchups for NIIT
Pair Trading with Dow Jones and NIIT
The main advantage of trading using opposite Dow Jones and NIIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, NIIT 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 NIIT will offset losses from the drop in NIIT's long position.| Dow Jones vs. Mangazeya Mining | Dow Jones vs. Summit Materials | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. AMCON Distributing |
| NIIT vs. Royal Orchid Hotels | NIIT vs. LT Technology Services | NIIT vs. The Indian Hotels | NIIT vs. Chalet Hotels 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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