Correlation Between Dow Jones and Outcrop Gold
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Outcrop Gold 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 Outcrop Gold 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 Outcrop Gold Corp, you can compare the effects of market volatilities on Dow Jones and Outcrop Gold 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 Outcrop Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Outcrop Gold.
Diversification Opportunities for Dow Jones and Outcrop Gold
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and Outcrop is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Outcrop Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Outcrop Gold 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 Outcrop Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Outcrop Gold Corp has no effect on the direction of Dow Jones i.e., Dow Jones and Outcrop Gold go up and down completely randomly.
Pair Corralation between Dow Jones and Outcrop Gold
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.18 times more return on investment than Outcrop Gold. However, Dow Jones Industrial is 5.52 times less risky than Outcrop Gold. It trades about 0.36 of its potential returns per unit of risk. Outcrop Gold Corp is currently generating about -0.09 per unit of risk. If you would invest 4,179,460 in Dow Jones Industrial on September 4, 2024 and sell it today you would earn a total of 298,740 from holding Dow Jones Industrial or generate 7.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Dow Jones Industrial vs. Outcrop Gold Corp
Performance |
| Timeline |
Dow Jones and Outcrop Gold Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Outcrop Gold Corp
Pair trading matchups for Outcrop Gold
Pair Trading with Dow Jones and Outcrop Gold
The main advantage of trading using opposite Dow Jones and Outcrop Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Outcrop Gold 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 Outcrop Gold will offset losses from the drop in Outcrop Gold's long position.| Dow Jones vs. Gentex | Dow Jones vs. American Axle Manufacturing | Dow Jones vs. Pearson PLC ADR | Dow Jones vs. Marine Products |
| Outcrop Gold vs. CMC Metals | Outcrop Gold vs. Capitan Mining | Outcrop Gold vs. Cartier Iron Corp | Outcrop Gold vs. Alien Metals |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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