Correlation Between Dow Jones and Aspiriant Defensive
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Aspiriant Defensive 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 Aspiriant Defensive 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 Aspiriant Defensive Allocation, you can compare the effects of market volatilities on Dow Jones and Aspiriant Defensive 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 Aspiriant Defensive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Aspiriant Defensive.
Diversification Opportunities for Dow Jones and Aspiriant Defensive
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and Aspiriant is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Aspiriant Defensive Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspiriant Defensive 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 Aspiriant Defensive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspiriant Defensive has no effect on the direction of Dow Jones i.e., Dow Jones and Aspiriant Defensive go up and down completely randomly.
Pair Corralation between Dow Jones and Aspiriant Defensive
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 4.08 times more return on investment than Aspiriant Defensive. However, Dow Jones is 4.08 times more volatile than Aspiriant Defensive Allocation. It trades about 0.37 of its potential returns per unit of risk. Aspiriant Defensive Allocation is currently generating about -0.04 per unit of risk. If you would invest 4,179,460 in Dow Jones Industrial on September 4, 2024 and sell it today you would earn a total of 298,740 from holding Dow Jones Industrial or generate 7.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Dow Jones Industrial vs. Aspiriant Defensive Allocation
Performance |
| Timeline |
Dow Jones and Aspiriant Defensive Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Aspiriant Defensive Allocation
Pair trading matchups for Aspiriant Defensive
Pair Trading with Dow Jones and Aspiriant Defensive
The main advantage of trading using opposite Dow Jones and Aspiriant Defensive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Aspiriant Defensive 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 Aspiriant Defensive will offset losses from the drop in Aspiriant Defensive's long position.| Dow Jones vs. Gentex | Dow Jones vs. American Axle Manufacturing | Dow Jones vs. Pearson PLC ADR | Dow Jones vs. Marine Products |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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