Correlation Between Dow Jones and Sol Gel
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Sol Gel 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 Sol Gel 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 Sol Gel Technologies, you can compare the effects of market volatilities on Dow Jones and Sol Gel 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 Sol Gel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Sol Gel.
Diversification Opportunities for Dow Jones and Sol Gel
Very good diversification
The 3 months correlation between Dow and Sol is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Sol Gel Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sol Gel Technologies 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 Sol Gel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sol Gel Technologies has no effect on the direction of Dow Jones i.e., Dow Jones and Sol Gel go up and down completely randomly.
Pair Corralation between Dow Jones and Sol Gel
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the Sol Gel. But the index apears to be less risky and, when comparing its historical volatility, Dow Jones Industrial is 79.69 times less risky than Sol Gel. The index trades about -0.26 of its potential returns per unit of risk. The Sol Gel Technologies is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 48.00 in Sol Gel Technologies on October 14, 2024 and sell it today you would earn a total of 57.00 from holding Sol Gel Technologies or generate 118.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Sol Gel Technologies
Performance |
| Timeline |
Dow Jones and Sol Gel Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Sol Gel Technologies
Pair trading matchups for Sol Gel
Pair Trading with Dow Jones and Sol Gel
The main advantage of trading using opposite Dow Jones and Sol Gel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Sol Gel 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 Sol Gel will offset losses from the drop in Sol Gel's long position.| Dow Jones vs. Chipotle Mexican Grill | Dow Jones vs. Teleflex Incorporated | Dow Jones vs. Dine Brands Global | Dow Jones vs. Alvotech |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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