Correlation Between Dow Jones and Star Equity
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Star Equity 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 Star Equity 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 Star Equity Holdings, you can compare the effects of market volatilities on Dow Jones and Star Equity 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 Star Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Star Equity.
Diversification Opportunities for Dow Jones and Star Equity
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Star is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Star Equity Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Star Equity Holdings 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 Star Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Star Equity Holdings has no effect on the direction of Dow Jones i.e., Dow Jones and Star Equity go up and down completely randomly.
Pair Corralation between Dow Jones and Star Equity
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.36 times less return on investment than Star Equity. But when comparing it to its historical volatility, Dow Jones Industrial is 4.45 times less risky than Star Equity. It trades about 0.09 of its potential returns per unit of risk. Star Equity Holdings is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 774.00 in Star Equity Holdings on August 31, 2024 and sell it today you would earn a total of 143.00 from holding Star Equity Holdings or generate 18.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Star Equity Holdings
Performance |
| Timeline |
Dow Jones and Star Equity Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Star Equity Holdings
Pair trading matchups for Star Equity
Pair Trading with Dow Jones and Star Equity
The main advantage of trading using opposite Dow Jones and Star Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Star Equity 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 Star Equity will offset losses from the drop in Star Equity'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 |
| Star Equity vs. Star Equity Holdings | Star Equity vs. XOMA Corp | Star Equity vs. Fundamental Global | Star Equity vs. Fortress Biotech Pref |
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 CEOs Directory module to screen CEOs from public companies around the world.
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