Correlation Between Dow Jones and Security Bank
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Security Bank 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 Security Bank 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 Security Bank Corp, you can compare the effects of market volatilities on Dow Jones and Security Bank 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 Security Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Security Bank.
Diversification Opportunities for Dow Jones and Security Bank
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dow and Security is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Security Bank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Security Bank 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 Security Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Security Bank Corp has no effect on the direction of Dow Jones i.e., Dow Jones and Security Bank go up and down completely randomly.
Pair Corralation between Dow Jones and Security Bank
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.37 times more return on investment than Security Bank. However, Dow Jones Industrial is 2.72 times less risky than Security Bank. It trades about 0.37 of its potential returns per unit of risk. Security Bank Corp is currently generating about -0.06 per unit of risk. If you would invest 4,176,346 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 314,719 from holding Dow Jones Industrial or generate 7.54% 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. Security Bank Corp
Performance |
| Timeline |
Dow Jones and Security Bank Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Security Bank Corp
Pair trading matchups for Security Bank
Pair Trading with Dow Jones and Security Bank
The main advantage of trading using opposite Dow Jones and Security Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Security Bank 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 Security Bank will offset losses from the drop in Security Bank's long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| Security Bank vs. Metropolitan Bank Trust | Security Bank vs. Philippine National Bank | Security Bank vs. Asia United Bank | Security Bank vs. Philippine Savings Bank |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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