Correlation Between Dow Jones and Sharing Economy
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Sharing Economy 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 Sharing Economy 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 Sharing Economy International, you can compare the effects of market volatilities on Dow Jones and Sharing Economy 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 Sharing Economy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Sharing Economy.
Diversification Opportunities for Dow Jones and Sharing Economy
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Sharing is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Sharing Economy International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sharing Economy Inte 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 Sharing Economy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sharing Economy Inte has no effect on the direction of Dow Jones i.e., Dow Jones and Sharing Economy go up and down completely randomly.
Pair Corralation between Dow Jones and Sharing Economy
If you would invest 3,611,738 in Dow Jones Industrial on September 2, 2024 and sell it today you would earn a total of 879,327 from holding Dow Jones Industrial or generate 24.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 0.4% |
| Values | Daily Returns |
Dow Jones Industrial vs. Sharing Economy International
Performance |
| Timeline |
Dow Jones and Sharing Economy Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Sharing Economy International
Pair trading matchups for Sharing Economy
Pair Trading with Dow Jones and Sharing Economy
The main advantage of trading using opposite Dow Jones and Sharing Economy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Sharing Economy 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 Sharing Economy will offset losses from the drop in Sharing Economy'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 |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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