Correlation Between Dow Jones and SOUTHERN
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By analyzing existing cross correlation between Dow Jones Industrial and SOUTHERN CALIF EDISON, you can compare the effects of market volatilities on Dow Jones and SOUTHERN 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 SOUTHERN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and SOUTHERN.
Diversification Opportunities for Dow Jones and SOUTHERN
Excellent diversification
The 3 months correlation between Dow and SOUTHERN is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and SOUTHERN CALIF EDISON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOUTHERN CALIF EDISON 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 SOUTHERN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOUTHERN CALIF EDISON has no effect on the direction of Dow Jones i.e., Dow Jones and SOUTHERN go up and down completely randomly.
Pair Corralation between Dow Jones and SOUTHERN
Assuming the 90 days trading horizon Dow Jones is expected to generate 39.39 times less return on investment than SOUTHERN. But when comparing it to its historical volatility, Dow Jones Industrial is 73.95 times less risky than SOUTHERN. It trades about 0.09 of its potential returns per unit of risk. SOUTHERN CALIF EDISON is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 9,026 in SOUTHERN CALIF EDISON on September 5, 2024 and sell it today you would lose (451.00) from holding SOUTHERN CALIF EDISON or give up 5.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 73.33% |
| Values | Daily Returns |
Dow Jones Industrial vs. SOUTHERN CALIF EDISON
Performance |
| Timeline |
Dow Jones and SOUTHERN Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
SOUTHERN CALIF EDISON
Pair trading matchups for SOUTHERN
Pair Trading with Dow Jones and SOUTHERN
The main advantage of trading using opposite Dow Jones and SOUTHERN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, SOUTHERN 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 SOUTHERN will offset losses from the drop in SOUTHERN's long position.| Dow Jones vs. Shake Shack | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. Dave Busters Entertainment | Dow Jones vs. Meli Hotels International |
| SOUTHERN vs. Park Ohio Holdings | SOUTHERN vs. Primoris Services | SOUTHERN vs. Griffon | SOUTHERN vs. AKITA Drilling |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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