Correlation Between Dow Jones and Patria Investments
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Patria Investments 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 Patria Investments 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 Patria Investments Limited, you can compare the effects of market volatilities on Dow Jones and Patria Investments 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 Patria Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Patria Investments.
Diversification Opportunities for Dow Jones and Patria Investments
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dow and Patria is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Patria Investments Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patria Investments 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 Patria Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patria Investments has no effect on the direction of Dow Jones i.e., Dow Jones and Patria Investments go up and down completely randomly.
Pair Corralation between Dow Jones and Patria Investments
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.62 times more return on investment than Patria Investments. However, Dow Jones Industrial is 1.62 times less risky than Patria Investments. It trades about -0.26 of its potential returns per unit of risk. Patria Investments Limited is currently generating about -0.26 per unit of risk. If you would invest 4,382,806 in Dow Jones Industrial on October 14, 2024 and sell it today you would lose (188,961) from holding Dow Jones Industrial or give up 4.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Patria Investments Limited
Performance |
| Timeline |
Dow Jones and Patria Investments Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Patria Investments Limited
Pair trading matchups for Patria Investments
Pair Trading with Dow Jones and Patria Investments
The main advantage of trading using opposite Dow Jones and Patria Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Patria Investments 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 Patria Investments will offset losses from the drop in Patria Investments' long position.| Dow Jones vs. Chipotle Mexican Grill | Dow Jones vs. Teleflex Incorporated | Dow Jones vs. Dine Brands Global | Dow Jones vs. Alvotech |
| Patria Investments vs. Fair Isaac | Patria Investments vs. United Airlines Holdings | Patria Investments vs. Westinghouse Air Brake | Patria Investments vs. SK Telecom Co, |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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