Correlation Between Dow Jones and SATO Technologies
Can any of the company-specific risk be diversified away by investing in both Dow Jones and SATO Technologies 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 SATO Technologies 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 SATO Technologies Corp, you can compare the effects of market volatilities on Dow Jones and SATO Technologies 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 SATO Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and SATO Technologies.
Diversification Opportunities for Dow Jones and SATO Technologies
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dow and SATO is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and SATO Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SATO Technologies Corp 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 SATO Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SATO Technologies Corp has no effect on the direction of Dow Jones i.e., Dow Jones and SATO Technologies go up and down completely randomly.
Pair Corralation between Dow Jones and SATO Technologies
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.11 times more return on investment than SATO Technologies. However, Dow Jones Industrial is 9.04 times less risky than SATO Technologies. It trades about 0.34 of its potential returns per unit of risk. SATO Technologies Corp is currently generating about -0.03 per unit of risk. If you would invest 4,205,219 in Dow Jones Industrial on September 2, 2024 and sell it today you would earn a total of 285,846 from holding Dow Jones Industrial or generate 6.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dow Jones Industrial vs. SATO Technologies Corp
Performance |
| Timeline |
Dow Jones and SATO Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
SATO Technologies Corp
Pair trading matchups for SATO Technologies
Pair Trading with Dow Jones and SATO Technologies
The main advantage of trading using opposite Dow Jones and SATO Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, SATO Technologies 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 SATO Technologies will offset losses from the drop in SATO Technologies' 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 |
| SATO Technologies vs. TGS Esports | SATO Technologies vs. Quorum Information Technologies | SATO Technologies vs. Altair Resources | SATO Technologies vs. Doman Building Materials |
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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