Correlation Between Dow Jones and Pakistan State
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Pakistan State 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 Pakistan State 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 Pakistan State Oil, you can compare the effects of market volatilities on Dow Jones and Pakistan State 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 Pakistan State. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Pakistan State.
Diversification Opportunities for Dow Jones and Pakistan State
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and Pakistan is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Pakistan State Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan State Oil 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 Pakistan State. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan State Oil has no effect on the direction of Dow Jones i.e., Dow Jones and Pakistan State go up and down completely randomly.
Pair Corralation between Dow Jones and Pakistan State
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.34 times more return on investment than Pakistan State. However, Dow Jones Industrial is 2.92 times less risky than Pakistan State. It trades about 0.3 of its potential returns per unit of risk. Pakistan State Oil is currently generating about -0.23 per unit of risk. If you would invest 4,270,656 in Dow Jones Industrial on November 5, 2024 and sell it today you would earn a total of 183,810 from holding Dow Jones Industrial or generate 4.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Dow Jones Industrial vs. Pakistan State Oil
Performance |
| Timeline |
Dow Jones and Pakistan State Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pakistan State Oil
Pair trading matchups for Pakistan State
Pair Trading with Dow Jones and Pakistan State
The main advantage of trading using opposite Dow Jones and Pakistan State positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Pakistan State 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 Pakistan State will offset losses from the drop in Pakistan State's long position.The idea behind Dow Jones Industrial and Pakistan State Oil pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Pakistan State vs. Adamjee Insurance | Pakistan State vs. Universal Insurance | Pakistan State vs. AKD Hospitality | Pakistan State vs. EFU General Insurance |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |