Correlation Between Dow Jones and Nuscale Power
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Nuscale Power 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 Nuscale Power 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 Nuscale Power Corp, you can compare the effects of market volatilities on Dow Jones and Nuscale Power 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 Nuscale Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Nuscale Power.
Diversification Opportunities for Dow Jones and Nuscale Power
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dow and Nuscale is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Nuscale Power Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuscale Power 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 Nuscale Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuscale Power Corp has no effect on the direction of Dow Jones i.e., Dow Jones and Nuscale Power go up and down completely randomly.
Pair Corralation between Dow Jones and Nuscale Power
Assuming the 90 days trading horizon Dow Jones is expected to generate 5.39 times less return on investment than Nuscale Power. But when comparing it to its historical volatility, Dow Jones Industrial is 7.42 times less risky than Nuscale Power. It trades about 0.26 of its potential returns per unit of risk. Nuscale Power Corp is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 2,200 in Nuscale Power Corp on August 27, 2024 and sell it today you would earn a total of 606.00 from holding Nuscale Power Corp or generate 27.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Nuscale Power Corp
Performance |
| Timeline |
Dow Jones and Nuscale Power Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Nuscale Power Corp
Pair trading matchups for Nuscale Power
Pair Trading with Dow Jones and Nuscale Power
The main advantage of trading using opposite Dow Jones and Nuscale Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Nuscale Power 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 Nuscale Power will offset losses from the drop in Nuscale Power'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 |
| Nuscale Power vs. Cummins | Nuscale Power vs. Chart Industries | Nuscale Power vs. GE Aerospace | Nuscale Power vs. Nel ASA |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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