Correlation Between Dow Jones and Peapack Gladstone
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Peapack Gladstone 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 Peapack Gladstone 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 Peapack Gladstone Financial, you can compare the effects of market volatilities on Dow Jones and Peapack Gladstone 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 Peapack Gladstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Peapack Gladstone.
Diversification Opportunities for Dow Jones and Peapack Gladstone
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dow and Peapack is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Peapack Gladstone Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peapack Gladstone 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 Peapack Gladstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peapack Gladstone has no effect on the direction of Dow Jones i.e., Dow Jones and Peapack Gladstone go up and down completely randomly.
Pair Corralation between Dow Jones and Peapack Gladstone
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.4 times more return on investment than Peapack Gladstone. However, Dow Jones Industrial is 2.53 times less risky than Peapack Gladstone. It trades about 0.34 of its potential returns per unit of risk. Peapack Gladstone Financial is currently generating about 0.05 per unit of risk. If you would invest 4,239,227 in Dow Jones Industrial on November 3, 2024 and sell it today you would earn a total of 215,239 from holding Dow Jones Industrial or generate 5.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Peapack Gladstone Financial
Performance |
| Timeline |
Dow Jones and Peapack Gladstone Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Peapack Gladstone Financial
Pair trading matchups for Peapack Gladstone
Pair Trading with Dow Jones and Peapack Gladstone
The main advantage of trading using opposite Dow Jones and Peapack Gladstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Peapack Gladstone 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 Peapack Gladstone will offset losses from the drop in Peapack Gladstone's long position.| Dow Jones vs. Cincinnati Financial | Dow Jones vs. Kellanova | Dow Jones vs. Acme United | Dow Jones vs. Procter Gamble |
| Peapack Gladstone vs. Sound Financial Bancorp | Peapack Gladstone vs. Finward Bancorp | Peapack Gladstone vs. Franklin Financial Services | Peapack Gladstone vs. Community West Bancshares |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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