Correlation Between Dow Jones and Superior Plus
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Superior Plus 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 Superior Plus 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 Superior Plus Corp, you can compare the effects of market volatilities on Dow Jones and Superior Plus 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 Superior Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Superior Plus.
Diversification Opportunities for Dow Jones and Superior Plus
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Dow and Superior is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Superior Plus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Plus 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 Superior Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Plus Corp has no effect on the direction of Dow Jones i.e., Dow Jones and Superior Plus go up and down completely randomly.
Pair Corralation between Dow Jones and Superior Plus
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.19 times more return on investment than Superior Plus. However, Dow Jones Industrial is 5.23 times less risky than Superior Plus. It trades about 0.29 of its potential returns per unit of risk. Superior Plus Corp is currently generating about 0.01 per unit of risk. If you would invest 4,214,154 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 258,052 from holding Dow Jones Industrial or generate 6.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Superior Plus Corp
Performance |
| Timeline |
Dow Jones and Superior Plus Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Superior Plus Corp
Pair trading matchups for Superior Plus
Pair Trading with Dow Jones and Superior Plus
The main advantage of trading using opposite Dow Jones and Superior Plus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Superior Plus 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 Superior Plus will offset losses from the drop in Superior Plus' long position.| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
| Superior Plus vs. Gibson Energy | Superior Plus vs. Parkland Fuel | Superior Plus vs. Mullen Group | Superior Plus vs. Keyera Corp |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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