Correlation Between Dow Jones and Atlas America
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Atlas America at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Dow Jones and Atlas America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Atlas America, you can compare the effects of market volatilities on Dow Jones and Atlas America 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 Atlas America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Atlas America.
Diversification Opportunities for Dow Jones and Atlas America
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dow and Atlas is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Atlas America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas America 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 Atlas America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas America has no effect on the direction of Dow Jones i.e., Dow Jones and Atlas America go up and down completely randomly.
Pair Corralation between Dow Jones and Atlas America
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the Atlas America. In addition to that, Dow Jones is 2.21 times more volatile than Atlas America. It trades about -0.01 of its total potential returns per unit of risk. Atlas America is currently generating about 0.14 per unit of volatility. If you would invest 2,513 in Atlas America on September 14, 2024 and sell it today you would earn a total of 14.00 from holding Atlas America or generate 0.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 76.19% |
| Values | Daily Returns |
Dow Jones Industrial vs. Atlas America
Performance |
| Timeline |
Dow Jones and Atlas America Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Atlas America
Pair trading matchups for Atlas America
Pair Trading with Dow Jones and Atlas America
The main advantage of trading using opposite Dow Jones and Atlas America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Atlas America 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 Atlas America will offset losses from the drop in Atlas America's long position.| Dow Jones vs. Hurco Companies | Dow Jones vs. Tyson Foods | Dow Jones vs. MYR Group | Dow Jones vs. Cannae Holdings |
| Atlas America vs. Vanguard Total Stock | Atlas America vs. SPDR SP 500 | Atlas America vs. iShares Core SP | Atlas America vs. Vanguard Total Bond |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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