Correlation Between Dow Jones and AMAZONCOM
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By analyzing existing cross correlation between Dow Jones Industrial and AMAZONCOM INC, you can compare the effects of market volatilities on Dow Jones and AMAZONCOM 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 AMAZONCOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and AMAZONCOM.
Diversification Opportunities for Dow Jones and AMAZONCOM
Very weak diversification
The 3 months correlation between Dow and AMAZONCOM is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and AMAZONCOM INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMAZONCOM INC 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 AMAZONCOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMAZONCOM INC has no effect on the direction of Dow Jones i.e., Dow Jones and AMAZONCOM go up and down completely randomly.
Pair Corralation between Dow Jones and AMAZONCOM
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.12 times more return on investment than AMAZONCOM. However, Dow Jones is 1.12 times more volatile than AMAZONCOM INC. It trades about 0.34 of its potential returns per unit of risk. AMAZONCOM INC is currently generating about 0.23 per unit of risk. If you would invest 4,252,836 in Dow Jones Industrial on November 8, 2024 and sell it today you would earn a total of 221,927 from holding Dow Jones Industrial or generate 5.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. AMAZONCOM INC
Performance |
| Timeline |
Dow Jones and AMAZONCOM Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
AMAZONCOM INC
Pair trading matchups for AMAZONCOM
Pair Trading with Dow Jones and AMAZONCOM
The main advantage of trading using opposite Dow Jones and AMAZONCOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, AMAZONCOM 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 AMAZONCOM will offset losses from the drop in AMAZONCOM's long position.| Dow Jones vs. National Vision Holdings | Dow Jones vs. Grocery Outlet Holding | Dow Jones vs. Asbury Automotive Group | Dow Jones vs. Hanover Foods |
| AMAZONCOM vs. CVW CleanTech | AMAZONCOM vs. Columbia Sportswear | AMAZONCOM vs. Cleantech Power Corp | AMAZONCOM vs. Victorias Secret Co |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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