Correlation Between Dow Jones and Picton Mahoney
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Picton Mahoney 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 Picton Mahoney 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 Picton Mahoney Fortified, you can compare the effects of market volatilities on Dow Jones and Picton Mahoney 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 Picton Mahoney. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Picton Mahoney.
Diversification Opportunities for Dow Jones and Picton Mahoney
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dow and Picton is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Picton Mahoney Fortified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Picton Mahoney Fortified 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 Picton Mahoney. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Picton Mahoney Fortified has no effect on the direction of Dow Jones i.e., Dow Jones and Picton Mahoney go up and down completely randomly.
Pair Corralation between Dow Jones and Picton Mahoney
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.9 times more return on investment than Picton Mahoney. However, Dow Jones Industrial is 1.11 times less risky than Picton Mahoney. It trades about 0.37 of its potential returns per unit of risk. Picton Mahoney Fortified is currently generating about 0.3 per unit of risk. If you would invest 4,176,346 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 314,719 from holding Dow Jones Industrial or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 91.3% |
| Values | Daily Returns |
Dow Jones Industrial vs. Picton Mahoney Fortified
Performance |
| Timeline |
Dow Jones and Picton Mahoney Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Picton Mahoney Fortified
Pair trading matchups for Picton Mahoney
Pair Trading with Dow Jones and Picton Mahoney
The main advantage of trading using opposite Dow Jones and Picton Mahoney positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Picton Mahoney 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 Picton Mahoney will offset losses from the drop in Picton Mahoney's long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| Picton Mahoney vs. Brompton Global Dividend | Picton Mahoney vs. Global Healthcare Income | Picton Mahoney vs. Tech Leaders Income | Picton Mahoney vs. Brompton North American |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |