Correlation Between Dow Jones and THOR Financial
Can any of the company-specific risk be diversified away by investing in both Dow Jones and THOR Financial 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 THOR Financial 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 THOR Financial Technologies, you can compare the effects of market volatilities on Dow Jones and THOR Financial 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 THOR Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and THOR Financial.
Diversification Opportunities for Dow Jones and THOR Financial
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dow and THOR is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and THOR Financial Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THOR Financial Techn 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 THOR Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THOR Financial Techn has no effect on the direction of Dow Jones i.e., Dow Jones and THOR Financial go up and down completely randomly.
Pair Corralation between Dow Jones and THOR Financial
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.18 times more return on investment than THOR Financial. However, Dow Jones is 1.18 times more volatile than THOR Financial Technologies. It trades about -0.01 of its potential returns per unit of risk. THOR Financial Technologies is currently generating about -0.07 per unit of risk. If you would invest 4,429,313 in Dow Jones Industrial on September 12, 2024 and sell it today you would lose (4,530) from holding Dow Jones Industrial or give up 0.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dow Jones Industrial vs. THOR Financial Technologies
Performance |
| Timeline |
Dow Jones and THOR Financial Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
THOR Financial Technologies
Pair trading matchups for THOR Financial
Pair Trading with Dow Jones and THOR Financial
The main advantage of trading using opposite Dow Jones and THOR Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, THOR Financial 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 THOR Financial will offset losses from the drop in THOR Financial's long position.| Dow Jones vs. Aeye Inc | Dow Jones vs. Gentex | Dow Jones vs. Marine Products | Dow Jones vs. CarsalesCom Ltd ADR |
| THOR Financial vs. ETC 6 Meridian | THOR Financial vs. Harbor Dividend Growth | THOR Financial vs. Day HaganNed Davis |
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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