Correlation Between Dow Jones and HAN GINS
Can any of the company-specific risk be diversified away by investing in both Dow Jones and HAN GINS 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 HAN GINS 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 HAN GINS Indxx Healthcare, you can compare the effects of market volatilities on Dow Jones and HAN GINS 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 HAN GINS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and HAN GINS.
Diversification Opportunities for Dow Jones and HAN GINS
Average diversification
The 3 months correlation between Dow and HAN is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and HAN GINS Indxx Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HAN GINS Indxx 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 HAN GINS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HAN GINS Indxx has no effect on the direction of Dow Jones i.e., Dow Jones and HAN GINS go up and down completely randomly.
Pair Corralation between Dow Jones and HAN GINS
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.34 times more return on investment than HAN GINS. However, Dow Jones Industrial is 2.93 times less risky than HAN GINS. It trades about 0.01 of its potential returns per unit of risk. HAN GINS Indxx Healthcare is currently generating about -0.11 per unit of risk. If you would invest 4,338,960 in Dow Jones Industrial on September 19, 2024 and sell it today you would earn a total of 6,030 from holding Dow Jones Industrial or generate 0.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dow Jones Industrial vs. HAN GINS Indxx Healthcare
Performance |
| Timeline |
Dow Jones and HAN GINS Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
HAN GINS Indxx Healthcare
Pair trading matchups for HAN GINS
Pair Trading with Dow Jones and HAN GINS
The main advantage of trading using opposite Dow Jones and HAN GINS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, HAN GINS 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 HAN GINS will offset losses from the drop in HAN GINS's long position.| Dow Jones vs. Mangazeya Mining | Dow Jones vs. Summit Materials | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. AMCON Distributing |
| HAN GINS vs. HAN GINS Tech Megatrend | HAN GINS vs. Amundi Index Solutions | HAN GINS vs. Multi Units Luxembourg | HAN GINS vs. iShares Digital Entertainment |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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