Correlation Between Dow Jones and EXPNLN
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By analyzing existing cross correlation between Dow Jones Industrial and EXPNLN 425 01 FEB 29, you can compare the effects of market volatilities on Dow Jones and EXPNLN 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 EXPNLN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and EXPNLN.
Diversification Opportunities for Dow Jones and EXPNLN
Very weak diversification
The 3 months correlation between Dow and EXPNLN is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and EXPNLN 425 01 FEB 29 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EXPNLN 425 01 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 EXPNLN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EXPNLN 425 01 has no effect on the direction of Dow Jones i.e., Dow Jones and EXPNLN go up and down completely randomly.
Pair Corralation between Dow Jones and EXPNLN
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 4.2 times more return on investment than EXPNLN. However, Dow Jones is 4.2 times more volatile than EXPNLN 425 01 FEB 29. It trades about 0.34 of its potential returns per unit of risk. EXPNLN 425 01 FEB 29 is currently generating about 0.26 per unit of risk. If you would invest 4,205,219 in Dow Jones Industrial on September 2, 2024 and sell it today you would earn a total of 285,846 from holding Dow Jones Industrial or generate 6.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 42.86% |
| Values | Daily Returns |
Dow Jones Industrial vs. EXPNLN 425 01 FEB 29
Performance |
| Timeline |
Dow Jones and EXPNLN Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
EXPNLN 425 01 FEB 29
Pair trading matchups for EXPNLN
Pair Trading with Dow Jones and EXPNLN
The main advantage of trading using opposite Dow Jones and EXPNLN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, EXPNLN 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 EXPNLN will offset losses from the drop in EXPNLN'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 |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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