Correlation Between Dow Jones and LendingTree
Can any of the company-specific risk be diversified away by investing in both Dow Jones and LendingTree 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 LendingTree 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 LendingTree, you can compare the effects of market volatilities on Dow Jones and LendingTree 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 LendingTree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and LendingTree.
Diversification Opportunities for Dow Jones and LendingTree
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and LendingTree is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and LendingTree in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LendingTree 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 LendingTree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LendingTree has no effect on the direction of Dow Jones i.e., Dow Jones and LendingTree go up and down completely randomly.
Pair Corralation between Dow Jones and LendingTree
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.16 times more return on investment than LendingTree. However, Dow Jones Industrial is 6.15 times less risky than LendingTree. It trades about 0.27 of its potential returns per unit of risk. LendingTree is currently generating about -0.09 per unit of risk. If you would invest 4,223,305 in Dow Jones Industrial on August 30, 2024 and sell it today you would earn a total of 248,901 from holding Dow Jones Industrial or generate 5.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. LendingTree
Performance |
| Timeline |
Dow Jones and LendingTree Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
LendingTree
Pair trading matchups for LendingTree
Pair Trading with Dow Jones and LendingTree
The main advantage of trading using opposite Dow Jones and LendingTree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, LendingTree 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 LendingTree will offset losses from the drop in LendingTree's long position.| Dow Jones vs. Skillful Craftsman Education | Dow Jones vs. Acco Brands | Dow Jones vs. Cracker Barrel Old | Dow Jones vs. Coursera |
| LendingTree vs. DATANG INTL POW | LendingTree vs. NTT DATA | LendingTree vs. Sumitomo Mitsui Construction | LendingTree vs. North American Construction |
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.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |