Correlation Between Dow Jones and SCI Engineered
Can any of the company-specific risk be diversified away by investing in both Dow Jones and SCI Engineered 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 SCI Engineered 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 SCI Engineered Materials, you can compare the effects of market volatilities on Dow Jones and SCI Engineered 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 SCI Engineered. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and SCI Engineered.
Diversification Opportunities for Dow Jones and SCI Engineered
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and SCI is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and SCI Engineered Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCI Engineered Materials 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 SCI Engineered. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCI Engineered Materials has no effect on the direction of Dow Jones i.e., Dow Jones and SCI Engineered go up and down completely randomly.
Pair Corralation between Dow Jones and SCI Engineered
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.39 times less return on investment than SCI Engineered. But when comparing it to its historical volatility, Dow Jones Industrial is 4.71 times less risky than SCI Engineered. It trades about 0.11 of its potential returns per unit of risk. SCI Engineered Materials is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 410.00 in SCI Engineered Materials on September 2, 2024 and sell it today you would earn a total of 87.00 from holding SCI Engineered Materials or generate 21.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 91.4% |
| Values | Daily Returns |
Dow Jones Industrial vs. SCI Engineered Materials
Performance |
| Timeline |
Dow Jones and SCI Engineered Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
SCI Engineered Materials
Pair trading matchups for SCI Engineered
Pair Trading with Dow Jones and SCI Engineered
The main advantage of trading using opposite Dow Jones and SCI Engineered positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, SCI Engineered 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 SCI Engineered will offset losses from the drop in SCI Engineered'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 |
| SCI Engineered vs. Ultra Clean Holdings | SCI Engineered vs. Amtech Systems | SCI Engineered vs. Veeco Instruments | SCI Engineered vs. Cohu Inc |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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