Correlation Between Dow Jones and Tglix
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Tglix 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 Tglix 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 Tglix, you can compare the effects of market volatilities on Dow Jones and Tglix 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 Tglix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Tglix.
Diversification Opportunities for Dow Jones and Tglix
Average diversification
The 3 months correlation between Dow and Tglix is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Tglix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tglix 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 Tglix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tglix has no effect on the direction of Dow Jones i.e., Dow Jones and Tglix go up and down completely randomly.
Pair Corralation between Dow Jones and Tglix
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.23 times less return on investment than Tglix. But when comparing it to its historical volatility, Dow Jones Industrial is 2.25 times less risky than Tglix. It trades about 0.08 of its potential returns per unit of risk. Tglix is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4,202 in Tglix on September 2, 2024 and sell it today you would earn a total of 1,428 from holding Tglix or generate 33.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Tglix
Performance |
| Timeline |
Dow Jones and Tglix Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Tglix
Pair trading matchups for Tglix
Pair Trading with Dow Jones and Tglix
The main advantage of trading using opposite Dow Jones and Tglix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Tglix 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 Tglix will offset losses from the drop in Tglix'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 |
| Tglix vs. Baillie Gifford Health | Tglix vs. The Gabelli Healthcare | Tglix vs. Deutsche Health And | Tglix vs. Highland Longshort Healthcare |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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