Correlation Between Dow Jones and NATIONAL
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By analyzing existing cross correlation between Dow Jones Industrial and NATIONAL RURAL UTILS, you can compare the effects of market volatilities on Dow Jones and NATIONAL 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 NATIONAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and NATIONAL.
Diversification Opportunities for Dow Jones and NATIONAL
Poor diversification
The 3 months correlation between Dow and NATIONAL is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and NATIONAL RURAL UTILS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NATIONAL RURAL UTILS 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 NATIONAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NATIONAL RURAL UTILS has no effect on the direction of Dow Jones i.e., Dow Jones and NATIONAL go up and down completely randomly.
Pair Corralation between Dow Jones and NATIONAL
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.36 times more return on investment than NATIONAL. However, Dow Jones Industrial is 2.81 times less risky than NATIONAL. It trades about 0.37 of its potential returns per unit of risk. NATIONAL RURAL UTILS is currently generating about -0.43 per unit of risk. If you would invest 4,176,346 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 314,719 from holding Dow Jones Industrial or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 23.81% |
| Values | Daily Returns |
Dow Jones Industrial vs. NATIONAL RURAL UTILS
Performance |
| Timeline |
Dow Jones and NATIONAL Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
NATIONAL RURAL UTILS
Pair trading matchups for NATIONAL
Pair Trading with Dow Jones and NATIONAL
The main advantage of trading using opposite Dow Jones and NATIONAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, NATIONAL 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 NATIONAL will offset losses from the drop in NATIONAL's long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| NATIONAL vs. AEP TEX INC | NATIONAL vs. US BANK NATIONAL | NATIONAL vs. American Express | NATIONAL vs. Chevron Corp |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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