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, 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
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Patria is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Patria Investments 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 is expected to generate 1.52 times less return on investment than Patria Investments. But when comparing it to its historical volatility, Dow Jones Industrial is 1.59 times less risky than Patria Investments. It trades about 0.26 of its potential returns per unit of risk. Patria Investments is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,160 in Patria Investments on August 28, 2024 and sell it today you would earn a total of 98.00 from holding Patria Investments or generate 8.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Patria Investments
Performance |
| Timeline |
Dow Jones and Patria Investments Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Patria Investments
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. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
| Patria Investments vs. Invesco Advantage MIT | Patria Investments vs. Invesco Municipal Trust | Patria Investments vs. Invesco California Value | Patria Investments vs. Brightsphere Investment Group |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |