Correlation Between Dow Jones and ALIBABA
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By analyzing existing cross correlation between Dow Jones Industrial and ALIBABA GROUP HLDG, you can compare the effects of market volatilities on Dow Jones and ALIBABA 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 ALIBABA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and ALIBABA.
Diversification Opportunities for Dow Jones and ALIBABA
Very good diversification
The 3 months correlation between Dow and ALIBABA is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and ALIBABA GROUP HLDG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALIBABA GROUP HLDG 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 ALIBABA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALIBABA GROUP HLDG has no effect on the direction of Dow Jones i.e., Dow Jones and ALIBABA go up and down completely randomly.
Pair Corralation between Dow Jones and ALIBABA
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.01 times more return on investment than ALIBABA. However, Dow Jones is 1.01 times more volatile than ALIBABA GROUP HLDG. It trades about 0.27 of its potential returns per unit of risk. ALIBABA GROUP HLDG is currently generating about -0.19 per unit of risk. If you would invest 4,238,757 in Dow Jones Industrial on August 28, 2024 and sell it today you would earn a total of 247,274 from holding Dow Jones Industrial or generate 5.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 81.82% |
| Values | Daily Returns |
Dow Jones Industrial vs. ALIBABA GROUP HLDG
Performance |
| Timeline |
Dow Jones and ALIBABA Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
ALIBABA GROUP HLDG
Pair trading matchups for ALIBABA
Pair Trading with Dow Jones and ALIBABA
The main advantage of trading using opposite Dow Jones and ALIBABA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, ALIBABA 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 ALIBABA will offset losses from the drop in ALIBABA's long position.| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
| ALIBABA vs. AEP TEX INC | ALIBABA vs. US BANK NATIONAL | ALIBABA vs. Omega Healthcare Investors | ALIBABA vs. Zoom Video Communications |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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