Correlation Between Dow Jones and Stadion Trilogy
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Stadion Trilogy 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 Stadion Trilogy 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 Stadion Trilogy Alternative, you can compare the effects of market volatilities on Dow Jones and Stadion Trilogy 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 Stadion Trilogy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Stadion Trilogy.
Diversification Opportunities for Dow Jones and Stadion Trilogy
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Stadion is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Stadion Trilogy Alternative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stadion Trilogy Alte 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 Stadion Trilogy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stadion Trilogy Alte has no effect on the direction of Dow Jones i.e., Dow Jones and Stadion Trilogy go up and down completely randomly.
Pair Corralation between Dow Jones and Stadion Trilogy
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 2.2 times more return on investment than Stadion Trilogy. However, Dow Jones is 2.2 times more volatile than Stadion Trilogy Alternative. It trades about 0.2 of its potential returns per unit of risk. Stadion Trilogy Alternative is currently generating about -0.07 per unit of risk. If you would invest 4,093,693 in Dow Jones Industrial on September 2, 2024 and sell it today you would earn a total of 397,372 from holding Dow Jones Industrial or generate 9.71% 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. Stadion Trilogy Alternative
Performance |
| Timeline |
Dow Jones and Stadion Trilogy Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Stadion Trilogy Alternative
Pair trading matchups for Stadion Trilogy
Pair Trading with Dow Jones and Stadion Trilogy
The main advantage of trading using opposite Dow Jones and Stadion Trilogy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Stadion Trilogy 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 Stadion Trilogy will offset losses from the drop in Stadion Trilogy's long position.| Dow Jones vs. Dream Finders Homes | Dow Jones vs. GEN Restaurant Group, | Dow Jones vs. National Beverage Corp | Dow Jones vs. BJs Restaurants |
| Stadion Trilogy vs. Stadion Tactical Defensive | Stadion Trilogy vs. Stadion Tactical Defensive | Stadion Trilogy vs. Fidelity Advisor Balanced | Stadion Trilogy vs. Vanguard Total Stock |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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