Correlation Between Dow Jones and Western Alaska
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Western Alaska 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 Western Alaska 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 Western Alaska Minerals, you can compare the effects of market volatilities on Dow Jones and Western Alaska 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 Western Alaska. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Western Alaska.
Diversification Opportunities for Dow Jones and Western Alaska
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dow and Western is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Western Alaska Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Alaska Minerals 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 Western Alaska. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Alaska Minerals has no effect on the direction of Dow Jones i.e., Dow Jones and Western Alaska go up and down completely randomly.
Pair Corralation between Dow Jones and Western Alaska
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.64 times less return on investment than Western Alaska. But when comparing it to its historical volatility, Dow Jones Industrial is 10.58 times less risky than Western Alaska. It trades about 0.09 of its potential returns per unit of risk. Western Alaska Minerals is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 61.00 in Western Alaska Minerals on November 28, 2024 and sell it today you would lose (19.00) from holding Western Alaska Minerals or give up 31.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.46% |
| Values | Daily Returns |
Dow Jones Industrial vs. Western Alaska Minerals
Performance |
| Timeline |
Dow Jones and Western Alaska Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Western Alaska Minerals
Pair trading matchups for Western Alaska
Pair Trading with Dow Jones and Western Alaska
The main advantage of trading using opposite Dow Jones and Western Alaska positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Western Alaska 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 Western Alaska will offset losses from the drop in Western Alaska'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 |
| Western Alaska vs. First Tellurium Corp | Western Alaska vs. Max Resource Corp | Western Alaska vs. P2 Gold | Western Alaska vs. CMC Metals |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |