Correlation Between Dow Jones and Natures Miracle
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Natures Miracle 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 Natures Miracle 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 Natures Miracle Holding, you can compare the effects of market volatilities on Dow Jones and Natures Miracle 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 Natures Miracle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Natures Miracle.
Diversification Opportunities for Dow Jones and Natures Miracle
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dow and Natures is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Natures Miracle Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natures Miracle Holding 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 Natures Miracle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natures Miracle Holding has no effect on the direction of Dow Jones i.e., Dow Jones and Natures Miracle go up and down completely randomly.
Pair Corralation between Dow Jones and Natures Miracle
Assuming the 90 days trading horizon Dow Jones is expected to generate 3.87 times less return on investment than Natures Miracle. But when comparing it to its historical volatility, Dow Jones Industrial is 23.72 times less risky than Natures Miracle. It trades about 0.37 of its potential returns per unit of risk. Natures Miracle Holding is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 297.00 in Natures Miracle Holding on September 1, 2024 and sell it today you would lose (40.00) from holding Natures Miracle Holding or give up 13.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Natures Miracle Holding
Performance |
| Timeline |
Dow Jones and Natures Miracle Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Natures Miracle Holding
Pair trading matchups for Natures Miracle
Pair Trading with Dow Jones and Natures Miracle
The main advantage of trading using opposite Dow Jones and Natures Miracle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Natures Miracle 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 Natures Miracle will offset losses from the drop in Natures Miracle's long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| Natures Miracle vs. Barnes Group | Natures Miracle vs. Babcock Wilcox Enterprises | Natures Miracle vs. Crane Company | Natures Miracle vs. Hillenbrand |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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