Correlation Between Dow Jones and Weir Group
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Weir Group 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 Weir Group 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 Weir Group PLC, you can compare the effects of market volatilities on Dow Jones and Weir Group 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 Weir Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Weir Group.
Diversification Opportunities for Dow Jones and Weir Group
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dow and Weir is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Weir Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weir Group PLC 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 Weir Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weir Group PLC has no effect on the direction of Dow Jones i.e., Dow Jones and Weir Group go up and down completely randomly.
Pair Corralation between Dow Jones and Weir Group
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.42 times more return on investment than Weir Group. However, Dow Jones Industrial is 2.4 times less risky than Weir Group. It trades about 0.16 of its potential returns per unit of risk. Weir Group PLC is currently generating about 0.04 per unit of risk. If you would invest 3,880,733 in Dow Jones Industrial on September 3, 2024 and sell it today you would earn a total of 610,332 from holding Dow Jones Industrial or generate 15.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.43% |
| Values | Daily Returns |
Dow Jones Industrial vs. Weir Group PLC
Performance |
| Timeline |
Dow Jones and Weir Group Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Weir Group PLC
Pair trading matchups for Weir Group
Pair Trading with Dow Jones and Weir Group
The main advantage of trading using opposite Dow Jones and Weir Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Weir Group 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 Weir Group will offset losses from the drop in Weir Group's long position.| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
| Weir Group vs. Dear Cashmere Holding | Weir Group vs. Goff Corp | Weir Group vs. Wialan Technologies | Weir Group vs. Cgrowth Capital |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |