Correlation Between Dow Jones and NORTHROP
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By analyzing existing cross correlation between Dow Jones Industrial and NORTHROP GRUMMAN P, you can compare the effects of market volatilities on Dow Jones and NORTHROP 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 NORTHROP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and NORTHROP.
Diversification Opportunities for Dow Jones and NORTHROP
Excellent diversification
The 3 months correlation between Dow and NORTHROP is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and NORTHROP GRUMMAN P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORTHROP GRUMMAN P 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 NORTHROP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORTHROP GRUMMAN P has no effect on the direction of Dow Jones i.e., Dow Jones and NORTHROP go up and down completely randomly.
Pair Corralation between Dow Jones and NORTHROP
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.38 times more return on investment than NORTHROP. However, Dow Jones is 1.38 times more volatile than NORTHROP GRUMMAN P. It trades about 0.12 of its potential returns per unit of risk. NORTHROP GRUMMAN P is currently generating about -0.01 per unit of risk. If you would invest 3,383,361 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 1,107,704 from holding Dow Jones Industrial or generate 32.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Dow Jones Industrial vs. NORTHROP GRUMMAN P
Performance |
| Timeline |
Dow Jones and NORTHROP Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
NORTHROP GRUMMAN P
Pair trading matchups for NORTHROP
Pair Trading with Dow Jones and NORTHROP
The main advantage of trading using opposite Dow Jones and NORTHROP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, NORTHROP 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 NORTHROP will offset losses from the drop in NORTHROP's long position.| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
| NORTHROP vs. Dream Finders Homes | NORTHROP vs. Cumberland Pharmaceuticals | NORTHROP vs. Jacobs Solutions | NORTHROP vs. The Joint 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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