Correlation Between Dow Jones and Nextplat Corp
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Nextplat Corp 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 Nextplat Corp 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 Nextplat Corp, you can compare the effects of market volatilities on Dow Jones and Nextplat Corp 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 Nextplat Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Nextplat Corp.
Diversification Opportunities for Dow Jones and Nextplat Corp
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Nextplat is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Nextplat Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextplat Corp 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 Nextplat Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextplat Corp has no effect on the direction of Dow Jones i.e., Dow Jones and Nextplat Corp go up and down completely randomly.
Pair Corralation between Dow Jones and Nextplat Corp
Assuming the 90 days trading horizon Dow Jones is expected to generate 3.1 times less return on investment than Nextplat Corp. But when comparing it to its historical volatility, Dow Jones Industrial is 12.52 times less risky than Nextplat Corp. It trades about 0.12 of its potential returns per unit of risk. Nextplat Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 121.00 in Nextplat Corp on November 2, 2024 and sell it today you would lose (14.00) from holding Nextplat Corp or give up 11.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.04% |
| Values | Daily Returns |
Dow Jones Industrial vs. Nextplat Corp
Performance |
| Timeline |
Dow Jones and Nextplat Corp Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Nextplat Corp
Pair trading matchups for Nextplat Corp
Pair Trading with Dow Jones and Nextplat Corp
The main advantage of trading using opposite Dow Jones and Nextplat Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Nextplat Corp 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 Nextplat Corp will offset losses from the drop in Nextplat Corp's long position.| Dow Jones vs. Boston Properties | Dow Jones vs. Suntory Beverage Food | Dow Jones vs. Envista Holdings Corp | Dow Jones vs. Fevertree Drinks Plc |
| Nextplat Corp vs. RenoWorks Software | Nextplat Corp vs. LifeSpeak | Nextplat Corp vs. 01 Communique Laboratory | Nextplat Corp vs. Where Food Comes |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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