Correlation Between Dow Jones and Shaheen Insurance
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Shaheen Insurance 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 Shaheen Insurance 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 Shaheen Insurance, you can compare the effects of market volatilities on Dow Jones and Shaheen Insurance 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 Shaheen Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Shaheen Insurance.
Diversification Opportunities for Dow Jones and Shaheen Insurance
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dow and Shaheen is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Shaheen Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shaheen Insurance 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 Shaheen Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shaheen Insurance has no effect on the direction of Dow Jones i.e., Dow Jones and Shaheen Insurance go up and down completely randomly.
Pair Corralation between Dow Jones and Shaheen Insurance
Assuming the 90 days trading horizon Dow Jones is expected to generate 4.44 times less return on investment than Shaheen Insurance. But when comparing it to its historical volatility, Dow Jones Industrial is 6.02 times less risky than Shaheen Insurance. It trades about 0.12 of its potential returns per unit of risk. Shaheen Insurance is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 266.00 in Shaheen Insurance on August 31, 2024 and sell it today you would earn a total of 333.00 from holding Shaheen Insurance or generate 125.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 81.55% |
| Values | Daily Returns |
Dow Jones Industrial vs. Shaheen Insurance
Performance |
| Timeline |
Dow Jones and Shaheen Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Shaheen Insurance
Pair trading matchups for Shaheen Insurance
Pair Trading with Dow Jones and Shaheen Insurance
The main advantage of trading using opposite Dow Jones and Shaheen Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Shaheen Insurance 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 Shaheen Insurance will offset losses from the drop in Shaheen Insurance's long position.| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
| Shaheen Insurance vs. Habib Bank | Shaheen Insurance vs. National Bank of | Shaheen Insurance vs. United Bank | Shaheen Insurance vs. MCB 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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