Correlation Between Dow Jones and Step One
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Step One 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 Step One 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 Step One Clothing, you can compare the effects of market volatilities on Dow Jones and Step One 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 Step One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Step One.
Diversification Opportunities for Dow Jones and Step One
Excellent diversification
The 3 months correlation between Dow and Step is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Step One Clothing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Step One Clothing 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 Step One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Step One Clothing has no effect on the direction of Dow Jones i.e., Dow Jones and Step One go up and down completely randomly.
Pair Corralation between Dow Jones and Step One
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.21 times more return on investment than Step One. However, Dow Jones Industrial is 4.74 times less risky than Step One. It trades about 0.16 of its potential returns per unit of risk. Step One Clothing is currently generating about 0.01 per unit of risk. If you would invest 3,857,103 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 633,962 from holding Dow Jones Industrial or generate 16.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.45% |
| Values | Daily Returns |
Dow Jones Industrial vs. Step One Clothing
Performance |
| Timeline |
Dow Jones and Step One Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Step One Clothing
Pair trading matchups for Step One
Pair Trading with Dow Jones and Step One
The main advantage of trading using opposite Dow Jones and Step One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Step One 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 Step One will offset losses from the drop in Step One's 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 |
| Step One vs. Aneka Tambang Tbk | Step One vs. Unibail Rodamco Westfield SE | Step One vs. Macquarie Group | Step One vs. Commonwealth Bank |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |