Correlation Between Dow Jones and SITE Centers
Can any of the company-specific risk be diversified away by investing in both Dow Jones and SITE Centers 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 SITE Centers 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 SITE Centers Corp, you can compare the effects of market volatilities on Dow Jones and SITE Centers 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 SITE Centers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and SITE Centers.
Diversification Opportunities for Dow Jones and SITE Centers
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dow and SITE is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and SITE Centers Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SITE Centers Corp 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 SITE Centers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SITE Centers Corp has no effect on the direction of Dow Jones i.e., Dow Jones and SITE Centers go up and down completely randomly.
Pair Corralation between Dow Jones and SITE Centers
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 13.37 times more return on investment than SITE Centers. However, Dow Jones is 13.37 times more volatile than SITE Centers Corp. It trades about 0.37 of its potential returns per unit of risk. SITE Centers Corp is currently generating about 0.07 per unit of risk. If you would invest 4,179,460 in Dow Jones Industrial on September 5, 2024 and sell it today you would earn a total of 321,944 from holding Dow Jones Industrial or generate 7.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 77.27% |
| Values | Daily Returns |
Dow Jones Industrial vs. SITE Centers Corp
Performance |
| Timeline |
Dow Jones and SITE Centers Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
SITE Centers Corp
Pair trading matchups for SITE Centers
Pair Trading with Dow Jones and SITE Centers
The main advantage of trading using opposite Dow Jones and SITE Centers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, SITE Centers 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 SITE Centers will offset losses from the drop in SITE Centers' long position.| Dow Jones vs. Shake Shack | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. Dave Busters Entertainment | Dow Jones vs. Meli Hotels International |
| SITE Centers vs. The Gabelli Multimedia | SITE Centers vs. The Gabelli Equity | SITE Centers vs. Virtus AllianzGI Convertible | SITE Centers vs. John Hancock Income |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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