Correlation Between Dow Jones and NIP Group
Can any of the company-specific risk be diversified away by investing in both Dow Jones and NIP 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 NIP 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 NIP Group American, you can compare the effects of market volatilities on Dow Jones and NIP 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 NIP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and NIP Group.
Diversification Opportunities for Dow Jones and NIP Group
Excellent diversification
The 3 months correlation between Dow and NIP is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and NIP Group American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIP Group American 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 NIP Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIP Group American has no effect on the direction of Dow Jones i.e., Dow Jones and NIP Group go up and down completely randomly.
Pair Corralation between Dow Jones and NIP Group
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.07 times more return on investment than NIP Group. However, Dow Jones Industrial is 14.11 times less risky than NIP Group. It trades about 0.08 of its potential returns per unit of risk. NIP Group American is currently generating about 0.0 per unit of risk. If you would invest 3,400,504 in Dow Jones Industrial on September 2, 2024 and sell it today you would earn a total of 1,090,561 from holding Dow Jones Industrial or generate 32.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 18.15% |
| Values | Daily Returns |
Dow Jones Industrial vs. NIP Group American
Performance |
| Timeline |
Dow Jones and NIP Group Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
NIP Group American
Pair trading matchups for NIP Group
Pair Trading with Dow Jones and NIP Group
The main advantage of trading using opposite Dow Jones and NIP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, NIP 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 NIP Group will offset losses from the drop in NIP Group's long position.| Dow Jones vs. Dream Finders Homes | Dow Jones vs. GEN Restaurant Group, | Dow Jones vs. National Beverage Corp | Dow Jones vs. BJs Restaurants |
| NIP Group vs. Vera Bradley | NIP Group vs. Nike Inc | NIP Group vs. JD Sports Fashion | NIP Group vs. Burlington Stores |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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