Correlation Between Dow Jones and Westwater Resources
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Westwater Resources 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 Westwater Resources 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 Westwater Resources, you can compare the effects of market volatilities on Dow Jones and Westwater Resources 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 Westwater Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Westwater Resources.
Diversification Opportunities for Dow Jones and Westwater Resources
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dow and Westwater is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Westwater Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwater Resources 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 Westwater Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwater Resources has no effect on the direction of Dow Jones i.e., Dow Jones and Westwater Resources go up and down completely randomly.
Pair Corralation between Dow Jones and Westwater Resources
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.19 times more return on investment than Westwater Resources. However, Dow Jones Industrial is 5.21 times less risky than Westwater Resources. It trades about -0.29 of its potential returns per unit of risk. Westwater Resources is currently generating about -0.09 per unit of risk. If you would invest 4,473,657 in Dow Jones Industrial on September 25, 2024 and sell it today you would lose (182,962) from holding Dow Jones Industrial or give up 4.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Dow Jones Industrial vs. Westwater Resources
Performance |
| Timeline |
Dow Jones and Westwater Resources Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Westwater Resources
Pair trading matchups for Westwater Resources
Pair Trading with Dow Jones and Westwater Resources
The main advantage of trading using opposite Dow Jones and Westwater Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Westwater Resources 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 Westwater Resources will offset losses from the drop in Westwater Resources' long position.| Dow Jones vs. Aerofoam Metals | Dow Jones vs. Lion One Metals | Dow Jones vs. Blue Moon Metals | Dow Jones vs. Xunlei Ltd Adr |
| Westwater Resources vs. Columbia Sportswear | Westwater Resources vs. InPlay Oil Corp | Westwater Resources vs. Playtech plc | Westwater Resources vs. Pentair plc |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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