Correlation Between Dow Jones and TRANSCANADA
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By analyzing existing cross correlation between Dow Jones Industrial and TRANSCANADA PIPELINES LTD, you can compare the effects of market volatilities on Dow Jones and TRANSCANADA 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 TRANSCANADA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and TRANSCANADA.
Diversification Opportunities for Dow Jones and TRANSCANADA
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and TRANSCANADA is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and TRANSCANADA PIPELINES LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRANSCANADA PIPELINES LTD 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 TRANSCANADA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRANSCANADA PIPELINES LTD has no effect on the direction of Dow Jones i.e., Dow Jones and TRANSCANADA go up and down completely randomly.
Pair Corralation between Dow Jones and TRANSCANADA
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the TRANSCANADA. But the index apears to be less risky and, when comparing its historical volatility, Dow Jones Industrial is 1.89 times less risky than TRANSCANADA. The index trades about -0.19 of its potential returns per unit of risk. The TRANSCANADA PIPELINES LTD is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 10,362 in TRANSCANADA PIPELINES LTD on November 28, 2024 and sell it today you would earn a total of 122.00 from holding TRANSCANADA PIPELINES LTD or generate 1.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Dow Jones Industrial vs. TRANSCANADA PIPELINES LTD
Performance |
| Timeline |
Dow Jones and TRANSCANADA Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
TRANSCANADA PIPELINES LTD
Pair trading matchups for TRANSCANADA
Pair Trading with Dow Jones and TRANSCANADA
The main advantage of trading using opposite Dow Jones and TRANSCANADA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, TRANSCANADA 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 TRANSCANADA will offset losses from the drop in TRANSCANADA's long position.| Dow Jones vs. Gladstone Investment | Dow Jones vs. BW Offshore Limited | Dow Jones vs. Fidus Investment Corp | Dow Jones vs. Aperture Health |
| TRANSCANADA vs. Timken Company | TRANSCANADA vs. Pinterest | TRANSCANADA vs. BCE Inc | TRANSCANADA vs. Iridium Communications |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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