Correlation Between Dow Jones and Safe
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Safe 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 Safe 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 Safe and Green, you can compare the effects of market volatilities on Dow Jones and Safe 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 Safe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Safe.
Diversification Opportunities for Dow Jones and Safe
Pay attention - limited upside
The 3 months correlation between Dow and Safe is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Safe and Green in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safe and Green 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 Safe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safe and Green has no effect on the direction of Dow Jones i.e., Dow Jones and Safe go up and down completely randomly.
Pair Corralation between Dow Jones and Safe
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.1 times more return on investment than Safe. However, Dow Jones Industrial is 10.51 times less risky than Safe. It trades about 0.26 of its potential returns per unit of risk. Safe and Green is currently generating about -0.17 per unit of risk. If you would invest 4,238,757 in Dow Jones Industrial on August 28, 2024 and sell it today you would earn a total of 234,900 from holding Dow Jones Industrial or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Safe and Green
Performance |
| Timeline |
Dow Jones and Safe Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Safe and Green
Pair trading matchups for Safe
Pair Trading with Dow Jones and Safe
The main advantage of trading using opposite Dow Jones and Safe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Safe 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 Safe will offset losses from the drop in Safe's long position.| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
| Safe vs. Investcorp Credit Management | Safe vs. Medalist Diversified Reit | Safe vs. Aquagold International | Safe vs. Morningstar Unconstrained Allocation |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |