Correlation Between Dow Jones and ROC Energy
Can any of the company-specific risk be diversified away by investing in both Dow Jones and ROC Energy 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 ROC Energy 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 ROC Energy Acquisition, you can compare the effects of market volatilities on Dow Jones and ROC Energy 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 ROC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and ROC Energy.
Diversification Opportunities for Dow Jones and ROC Energy
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Dow and ROC is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and ROC Energy Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ROC Energy Acquisition 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 ROC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ROC Energy Acquisition has no effect on the direction of Dow Jones i.e., Dow Jones and ROC Energy go up and down completely randomly.
Pair Corralation between Dow Jones and ROC Energy
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.06 times more return on investment than ROC Energy. However, Dow Jones Industrial is 15.84 times less risky than ROC Energy. It trades about 0.11 of its potential returns per unit of risk. ROC Energy Acquisition is currently generating about -0.05 per unit of risk. If you would invest 3,406,633 in Dow Jones Industrial on September 2, 2024 and sell it today you would earn a total of 1,084,432 from holding Dow Jones Industrial or generate 31.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 1.88% |
| Values | Daily Returns |
Dow Jones Industrial vs. ROC Energy Acquisition
Performance |
| Timeline |
Dow Jones and ROC Energy Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
ROC Energy Acquisition
Pair trading matchups for ROC Energy
Pair Trading with Dow Jones and ROC Energy
The main advantage of trading using opposite Dow Jones and ROC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, ROC Energy 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 ROC Energy will offset losses from the drop in ROC Energy's long position.| Dow Jones vs. Dream Finders Homes | Dow Jones vs. GEN Restaurant Group, | Dow Jones vs. National Beverage Corp | Dow Jones vs. BJs Restaurants |
| ROC Energy vs. Canlan Ice Sports | ROC Energy vs. Summa Silver Corp | ROC Energy vs. Harmony Gold Mining | ROC Energy vs. Vindicator Silver Lead Mining |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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