Correlation Between Dow Jones and Alien Metals
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Alien Metals 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 Alien Metals 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 Alien Metals, you can compare the effects of market volatilities on Dow Jones and Alien Metals 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 Alien Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Alien Metals.
Diversification Opportunities for Dow Jones and Alien Metals
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Alien is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Alien Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alien Metals 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 Alien Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alien Metals has no effect on the direction of Dow Jones i.e., Dow Jones and Alien Metals go up and down completely randomly.
Pair Corralation between Dow Jones and Alien Metals
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.16 times more return on investment than Alien Metals. However, Dow Jones Industrial is 6.25 times less risky than Alien Metals. It trades about 0.09 of its potential returns per unit of risk. Alien Metals is currently generating about -0.06 per unit of risk. If you would invest 4,053,993 in Dow Jones Industrial on October 25, 2024 and sell it today you would earn a total of 361,680 from holding Dow Jones Industrial or generate 8.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.19% |
| Values | Daily Returns |
Dow Jones Industrial vs. Alien Metals
Performance |
| Timeline |
Dow Jones and Alien Metals Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Alien Metals
Pair trading matchups for Alien Metals
Pair Trading with Dow Jones and Alien Metals
The main advantage of trading using opposite Dow Jones and Alien Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Alien Metals 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 Alien Metals will offset losses from the drop in Alien Metals' long position.| Dow Jones vs. Xiabuxiabu Catering Management | Dow Jones vs. Neogen | Dow Jones vs. Orion Office Reit | Dow Jones vs. Bassett Furniture Industries |
| Alien Metals vs. Lundin Mining Corp | Alien Metals vs. Empire Metals Limited | Alien Metals vs. Software Circle plc | Alien Metals vs. Europa Metals |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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