Correlation Between Dow Jones and Eureka Design
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Eureka Design 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 Eureka Design 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 Eureka Design Public, you can compare the effects of market volatilities on Dow Jones and Eureka Design 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 Eureka Design. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Eureka Design.
Diversification Opportunities for Dow Jones and Eureka Design
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and Eureka is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Eureka Design Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eureka Design Public 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 Eureka Design. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eureka Design Public has no effect on the direction of Dow Jones i.e., Dow Jones and Eureka Design go up and down completely randomly.
Pair Corralation between Dow Jones and Eureka Design
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.2 times more return on investment than Eureka Design. However, Dow Jones Industrial is 4.93 times less risky than Eureka Design. It trades about 0.11 of its potential returns per unit of risk. Eureka Design Public is currently generating about -0.01 per unit of risk. If you would invest 3,312,774 in Dow Jones Industrial on August 26, 2024 and sell it today you would earn a total of 1,116,877 from holding Dow Jones Industrial or generate 33.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.95% |
| Values | Daily Returns |
Dow Jones Industrial vs. Eureka Design Public
Performance |
| Timeline |
Dow Jones and Eureka Design Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Eureka Design Public
Pair trading matchups for Eureka Design
Pair Trading with Dow Jones and Eureka Design
The main advantage of trading using opposite Dow Jones and Eureka Design positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Eureka Design 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 Eureka Design will offset losses from the drop in Eureka Design's long position.| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
| Eureka Design vs. Delta Electronics Public | Eureka Design vs. Delta Electronics Public | Eureka Design vs. Airports of Thailand | Eureka Design vs. Airports of Thailand |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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