Correlation Between Dow Jones and Shelton International
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Shelton International 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 Shelton International 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 Shelton International Select, you can compare the effects of market volatilities on Dow Jones and Shelton International 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 Shelton International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Shelton International.
Diversification Opportunities for Dow Jones and Shelton International
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Shelton is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Shelton International Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shelton International 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 Shelton International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shelton International has no effect on the direction of Dow Jones i.e., Dow Jones and Shelton International go up and down completely randomly.
Pair Corralation between Dow Jones and Shelton International
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.9 times more return on investment than Shelton International. However, Dow Jones Industrial is 1.11 times less risky than Shelton International. It trades about 0.11 of its potential returns per unit of risk. Shelton International Select is currently generating about 0.03 per unit of risk. If you would invest 3,312,774 in Dow Jones Industrial on August 26, 2024 and sell it today you would earn a total of 1,116,877 from holding Dow Jones Industrial or generate 33.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Shelton International Select
Performance |
| Timeline |
Dow Jones and Shelton International Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Shelton International Select
Pair trading matchups for Shelton International
Pair Trading with Dow Jones and Shelton International
The main advantage of trading using opposite Dow Jones and Shelton International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Shelton International 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 Shelton International will offset losses from the drop in Shelton International's long position.| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
| Shelton International vs. Baron International Growth | Shelton International vs. Shelton International Select | Shelton International vs. Davis International Fund | Shelton International vs. Blackrock Intl A |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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