Correlation Between Dow Jones and GENERAL
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By analyzing existing cross correlation between Dow Jones Industrial and GENERAL MTRS 5, you can compare the effects of market volatilities on Dow Jones and GENERAL 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 GENERAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and GENERAL.
Diversification Opportunities for Dow Jones and GENERAL
Pay attention - limited upside
The 3 months correlation between Dow and GENERAL is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and GENERAL MTRS 5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GENERAL MTRS 5 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 GENERAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GENERAL MTRS 5 has no effect on the direction of Dow Jones i.e., Dow Jones and GENERAL go up and down completely randomly.
Pair Corralation between Dow Jones and GENERAL
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.96 times more return on investment than GENERAL. However, Dow Jones Industrial is 1.04 times less risky than GENERAL. It trades about 0.2 of its potential returns per unit of risk. GENERAL MTRS 5 is currently generating about -0.05 per unit of risk. If you would invest 4,093,693 in Dow Jones Industrial on September 2, 2024 and sell it today you would earn a total of 397,372 from holding Dow Jones Industrial or generate 9.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. GENERAL MTRS 5
Performance |
| Timeline |
Dow Jones and GENERAL Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
GENERAL MTRS 5
Pair trading matchups for GENERAL
Pair Trading with Dow Jones and GENERAL
The main advantage of trading using opposite Dow Jones and GENERAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, GENERAL 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 GENERAL will offset losses from the drop in GENERAL'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 |
| GENERAL vs. Edgewell Personal Care | GENERAL vs. Rocky Brands | GENERAL vs. JD Sports Fashion | GENERAL vs. Saia Inc |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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