Correlation Between Dow Jones and Rock Oak
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Rock Oak 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 Rock Oak 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 Rock Oak E, you can compare the effects of market volatilities on Dow Jones and Rock Oak 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 Rock Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Rock Oak.
Diversification Opportunities for Dow Jones and Rock Oak
Almost no diversification
The 3 months correlation between Dow and Rock is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Rock Oak E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rock Oak E 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 Rock Oak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rock Oak E has no effect on the direction of Dow Jones i.e., Dow Jones and Rock Oak go up and down completely randomly.
Pair Corralation between Dow Jones and Rock Oak
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.43 times less return on investment than Rock Oak. But when comparing it to its historical volatility, Dow Jones Industrial is 1.05 times less risky than Rock Oak. It trades about 0.26 of its potential returns per unit of risk. Rock Oak E is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 1,954 in Rock Oak E on August 28, 2024 and sell it today you would earn a total of 157.00 from holding Rock Oak E or generate 8.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Rock Oak E
Performance |
| Timeline |
Dow Jones and Rock Oak Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Rock Oak E
Pair trading matchups for Rock Oak
Pair Trading with Dow Jones and Rock Oak
The main advantage of trading using opposite Dow Jones and Rock Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Rock Oak 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 Rock Oak will offset losses from the drop in Rock Oak's long position.| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
| Rock Oak vs. Live Oak Health | Rock Oak vs. River Oak Discovery | Rock Oak vs. Black Oak Emerging | Rock Oak vs. Pin Oak Equity |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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