Correlation Between Dow Jones and AMERICAN
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By analyzing existing cross correlation between Dow Jones Industrial and AMERICAN WTR CAP, you can compare the effects of market volatilities on Dow Jones and AMERICAN 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 AMERICAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and AMERICAN.
Diversification Opportunities for Dow Jones and AMERICAN
Significant diversification
The 3 months correlation between Dow and AMERICAN is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and AMERICAN WTR CAP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMERICAN WTR CAP 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 AMERICAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMERICAN WTR CAP has no effect on the direction of Dow Jones i.e., Dow Jones and AMERICAN go up and down completely randomly.
Pair Corralation between Dow Jones and AMERICAN
Assuming the 90 days trading horizon Dow Jones is expected to generate 3.21 times less return on investment than AMERICAN. But when comparing it to its historical volatility, Dow Jones Industrial is 2.91 times less risky than AMERICAN. It trades about 0.34 of its potential returns per unit of risk. AMERICAN WTR CAP is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 8,185 in AMERICAN WTR CAP on September 2, 2024 and sell it today you would earn a total of 846.00 from holding AMERICAN WTR CAP or generate 10.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 47.62% |
| Values | Daily Returns |
Dow Jones Industrial vs. AMERICAN WTR CAP
Performance |
| Timeline |
Dow Jones and AMERICAN Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
AMERICAN WTR CAP
Pair trading matchups for AMERICAN
Pair Trading with Dow Jones and AMERICAN
The main advantage of trading using opposite Dow Jones and AMERICAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, AMERICAN 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 AMERICAN will offset losses from the drop in AMERICAN's long position.| Dow Jones vs. Dream Finders Homes | Dow Jones vs. GEN Restaurant Group, | Dow Jones vs. National Beverage Corp | Dow Jones vs. BJs Restaurants |
| AMERICAN vs. Oatly Group AB | AMERICAN vs. Constellation Brands Class | AMERICAN vs. Cardinal Health | AMERICAN vs. Willamette Valley Vineyards |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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