Correlation Between Dow Jones and SAB Biotherapeutics
Can any of the company-specific risk be diversified away by investing in both Dow Jones and SAB Biotherapeutics 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 SAB Biotherapeutics 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 SAB Biotherapeutics, you can compare the effects of market volatilities on Dow Jones and SAB Biotherapeutics 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 SAB Biotherapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and SAB Biotherapeutics.
Diversification Opportunities for Dow Jones and SAB Biotherapeutics
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dow and SAB is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and SAB Biotherapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAB Biotherapeutics 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 SAB Biotherapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAB Biotherapeutics has no effect on the direction of Dow Jones i.e., Dow Jones and SAB Biotherapeutics go up and down completely randomly.
Pair Corralation between Dow Jones and SAB Biotherapeutics
Assuming the 90 days trading horizon Dow Jones is expected to generate 2.5 times less return on investment than SAB Biotherapeutics. But when comparing it to its historical volatility, Dow Jones Industrial is 8.81 times less risky than SAB Biotherapeutics. It trades about 0.22 of its potential returns per unit of risk. SAB Biotherapeutics is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 292.00 in SAB Biotherapeutics on August 27, 2024 and sell it today you would earn a total of 11.00 from holding SAB Biotherapeutics or generate 3.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. SAB Biotherapeutics
Performance |
| Timeline |
Dow Jones and SAB Biotherapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
SAB Biotherapeutics
Pair trading matchups for SAB Biotherapeutics
Pair Trading with Dow Jones and SAB Biotherapeutics
The main advantage of trading using opposite Dow Jones and SAB Biotherapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, SAB Biotherapeutics 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 SAB Biotherapeutics will offset losses from the drop in SAB Biotherapeutics' long position.| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
| SAB Biotherapeutics vs. Processa Pharmaceuticals | SAB Biotherapeutics vs. Third Harmonic Bio | SAB Biotherapeutics vs. Cingulate Warrants | SAB Biotherapeutics vs. Anebulo Pharmaceuticals |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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