Correlation Between Dow Jones and Powerstorm Holdings
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Powerstorm Holdings 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 Powerstorm Holdings 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 Powerstorm Holdings, you can compare the effects of market volatilities on Dow Jones and Powerstorm Holdings 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 Powerstorm Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Powerstorm Holdings.
Diversification Opportunities for Dow Jones and Powerstorm Holdings
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Powerstorm is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Powerstorm Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powerstorm Holdings 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 Powerstorm Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powerstorm Holdings has no effect on the direction of Dow Jones i.e., Dow Jones and Powerstorm Holdings go up and down completely randomly.
Pair Corralation between Dow Jones and Powerstorm Holdings
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.09 times more return on investment than Powerstorm Holdings. However, Dow Jones Industrial is 10.81 times less risky than Powerstorm Holdings. It trades about 0.37 of its potential returns per unit of risk. Powerstorm Holdings is currently generating about -0.24 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 Against |
| Strength | Very Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Dow Jones Industrial vs. Powerstorm Holdings
Performance |
| Timeline |
Dow Jones and Powerstorm Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Powerstorm Holdings
Pair trading matchups for Powerstorm Holdings
Pair Trading with Dow Jones and Powerstorm Holdings
The main advantage of trading using opposite Dow Jones and Powerstorm Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Powerstorm Holdings 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 Powerstorm Holdings will offset losses from the drop in Powerstorm Holdings' long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| Powerstorm Holdings vs. Solid Power | Powerstorm Holdings vs. Plug Power | Powerstorm Holdings vs. FREYR Battery SA | Powerstorm Holdings vs. FuelCell Energy |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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