Correlation Between Dow Jones and Okapi Resources
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Okapi Resources 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 Okapi Resources 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 Okapi Resources Limited, you can compare the effects of market volatilities on Dow Jones and Okapi Resources 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 Okapi Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Okapi Resources.
Diversification Opportunities for Dow Jones and Okapi Resources
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Okapi is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Okapi Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Okapi Resources 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 Okapi Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Okapi Resources has no effect on the direction of Dow Jones i.e., Dow Jones and Okapi Resources go up and down completely randomly.
Pair Corralation between Dow Jones and Okapi Resources
Assuming the 90 days trading horizon Dow Jones is expected to generate 21.66 times less return on investment than Okapi Resources. But when comparing it to its historical volatility, Dow Jones Industrial is 33.51 times less risky than Okapi Resources. It trades about 0.08 of its potential returns per unit of risk. Okapi Resources Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 22.00 in Okapi Resources Limited on August 26, 2024 and sell it today you would lose (13.90) from holding Okapi Resources Limited or give up 63.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 31.79% |
| Values | Daily Returns |
Dow Jones Industrial vs. Okapi Resources Limited
Performance |
| Timeline |
Dow Jones and Okapi Resources Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Okapi Resources Limited
Pair trading matchups for Okapi Resources
Pair Trading with Dow Jones and Okapi Resources
The main advantage of trading using opposite Dow Jones and Okapi Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Okapi Resources 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 Okapi Resources will offset losses from the drop in Okapi Resources' long position.| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
| Okapi Resources vs. Blue Sky Uranium | Okapi Resources vs. Purepoint Uranium Group | Okapi Resources vs. Bannerman Resources | Okapi Resources vs. Baselode Energy Corp |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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