Correlation Between Dow Jones and WESCO
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By analyzing existing cross correlation between Dow Jones Industrial and WESCO Distribution 725, you can compare the effects of market volatilities on Dow Jones and WESCO 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 WESCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and WESCO.
Diversification Opportunities for Dow Jones and WESCO
Good diversification
The 3 months correlation between Dow and WESCO is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and WESCO Distribution 725 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESCO Distribution 725 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 WESCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESCO Distribution 725 has no effect on the direction of Dow Jones i.e., Dow Jones and WESCO go up and down completely randomly.
Pair Corralation between Dow Jones and WESCO
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 4.32 times more return on investment than WESCO. However, Dow Jones is 4.32 times more volatile than WESCO Distribution 725. It trades about 0.2 of its potential returns per unit of risk. WESCO Distribution 725 is currently generating about -0.01 per unit of risk. If you would invest 4,093,693 in Dow Jones Industrial on September 2, 2024 and sell it today you would earn a total of 397,372 from holding Dow Jones Industrial or generate 9.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.31% |
| Values | Daily Returns |
Dow Jones Industrial vs. WESCO Distribution 725
Performance |
| Timeline |
Dow Jones and WESCO Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
WESCO Distribution 725
Pair trading matchups for WESCO
Pair Trading with Dow Jones and WESCO
The main advantage of trading using opposite Dow Jones and WESCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, WESCO 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 WESCO will offset losses from the drop in WESCO's long position.| Dow Jones vs. Dream Finders Homes | Dow Jones vs. GEN Restaurant Group, | Dow Jones vs. National Beverage Corp | Dow Jones vs. BJs Restaurants |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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