Correlation Between Dow Jones and Sandfire Resources
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Sandfire Resources 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 Sandfire Resources 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 Sandfire Resources America, you can compare the effects of market volatilities on Dow Jones and Sandfire Resources 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 Sandfire Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Sandfire Resources.
Diversification Opportunities for Dow Jones and Sandfire Resources
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Sandfire is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Sandfire Resources America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandfire Resources 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 Sandfire Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandfire Resources has no effect on the direction of Dow Jones i.e., Dow Jones and Sandfire Resources go up and down completely randomly.
Pair Corralation between Dow Jones and Sandfire Resources
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.16 times more return on investment than Sandfire Resources. However, Dow Jones Industrial is 6.26 times less risky than Sandfire Resources. It trades about 0.37 of its potential returns per unit of risk. Sandfire Resources America is currently generating about 0.03 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 Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dow Jones Industrial vs. Sandfire Resources America
Performance |
| Timeline |
Dow Jones and Sandfire Resources Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Sandfire Resources America
Pair trading matchups for Sandfire Resources
Pair Trading with Dow Jones and Sandfire Resources
The main advantage of trading using opposite Dow Jones and Sandfire Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Sandfire Resources 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 Sandfire Resources will offset losses from the drop in Sandfire Resources' long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| Sandfire Resources vs. Richmond Minerals | Sandfire Resources vs. Pacific Bay Minerals | Sandfire Resources vs. Cobalt Power Group |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Stocks Directory Find actively traded stocks across global markets |