Correlation Between Dow Jones and NSTAR
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By analyzing existing cross correlation between Dow Jones Industrial and NSTAR ELEC 32, you can compare the effects of market volatilities on Dow Jones and NSTAR 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 NSTAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and NSTAR.
Diversification Opportunities for Dow Jones and NSTAR
Very good diversification
The 3 months correlation between Dow and NSTAR is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and NSTAR ELEC 32 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NSTAR ELEC 32 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 NSTAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NSTAR ELEC 32 has no effect on the direction of Dow Jones i.e., Dow Jones and NSTAR go up and down completely randomly.
Pair Corralation between Dow Jones and NSTAR
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.28 times more return on investment than NSTAR. However, Dow Jones is 1.28 times more volatile than NSTAR ELEC 32. It trades about 0.08 of its potential returns per unit of risk. NSTAR ELEC 32 is currently generating about 0.01 per unit of risk. If you would invest 3,410,864 in Dow Jones Industrial on September 3, 2024 and sell it today you would earn a total of 1,067,336 from holding Dow Jones Industrial or generate 31.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 87.07% |
| Values | Daily Returns |
Dow Jones Industrial vs. NSTAR ELEC 32
Performance |
| Timeline |
Dow Jones and NSTAR Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
NSTAR ELEC 32
Pair trading matchups for NSTAR
Pair Trading with Dow Jones and NSTAR
The main advantage of trading using opposite Dow Jones and NSTAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, NSTAR 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 NSTAR will offset losses from the drop in NSTAR's long position.| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
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 Stocks Directory module to find actively traded stocks across global markets.
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