Correlation Between Dow Jones and Saat Moderate
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Saat Moderate 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 Saat Moderate 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 Saat Moderate Strategy, you can compare the effects of market volatilities on Dow Jones and Saat Moderate 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 Saat Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Saat Moderate.
Diversification Opportunities for Dow Jones and Saat Moderate
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Saat is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Saat Moderate Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saat Moderate Strategy 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 Saat Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saat Moderate Strategy has no effect on the direction of Dow Jones i.e., Dow Jones and Saat Moderate go up and down completely randomly.
Pair Corralation between Dow Jones and Saat Moderate
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 2.77 times more return on investment than Saat Moderate. However, Dow Jones is 2.77 times more volatile than Saat Moderate Strategy. It trades about 0.1 of its potential returns per unit of risk. Saat Moderate Strategy is currently generating about 0.15 per unit of risk. If you would invest 4,290,695 in Dow Jones Industrial on October 23, 2024 and sell it today you would earn a total of 58,088 from holding Dow Jones Industrial or generate 1.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Dow Jones Industrial vs. Saat Moderate Strategy
Performance |
| Timeline |
Dow Jones and Saat Moderate Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Saat Moderate Strategy
Pair trading matchups for Saat Moderate
Pair Trading with Dow Jones and Saat Moderate
The main advantage of trading using opposite Dow Jones and Saat Moderate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Saat Moderate 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 Saat Moderate will offset losses from the drop in Saat Moderate's long position.| Dow Jones vs. Grupo Televisa SAB | Dow Jones vs. NiSource | Dow Jones vs. Kinetik Holdings | Dow Jones vs. Empresa Distribuidora y |
| Saat Moderate vs. Issachar Fund Class | Saat Moderate vs. Tax Managed Mid Small | Saat Moderate vs. T Rowe Price | Saat Moderate vs. Shelton Funds |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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