Correlation Between Dow Jones and Weiss Korea
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Weiss Korea 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 Weiss Korea 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 Weiss Korea Opportunity, you can compare the effects of market volatilities on Dow Jones and Weiss Korea 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 Weiss Korea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Weiss Korea.
Diversification Opportunities for Dow Jones and Weiss Korea
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dow and Weiss is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Weiss Korea Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weiss Korea Opportunity 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 Weiss Korea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weiss Korea Opportunity has no effect on the direction of Dow Jones i.e., Dow Jones and Weiss Korea go up and down completely randomly.
Pair Corralation between Dow Jones and Weiss Korea
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.47 times more return on investment than Weiss Korea. However, Dow Jones Industrial is 2.12 times less risky than Weiss Korea. It trades about 0.08 of its potential returns per unit of risk. Weiss Korea Opportunity is currently generating about 0.0 per unit of risk. If you would invest 3,279,840 in Dow Jones Industrial on November 27, 2024 and sell it today you would earn a total of 1,066,281 from holding Dow Jones Industrial or generate 32.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.4% |
| Values | Daily Returns |
Dow Jones Industrial vs. Weiss Korea Opportunity
Performance |
| Timeline |
Dow Jones and Weiss Korea Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Weiss Korea Opportunity
Pair trading matchups for Weiss Korea
Pair Trading with Dow Jones and Weiss Korea
The main advantage of trading using opposite Dow Jones and Weiss Korea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Weiss Korea 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 Weiss Korea will offset losses from the drop in Weiss Korea's long position.The idea behind Dow Jones Industrial and Weiss Korea Opportunity pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Weiss Korea vs. Atalaya Mining | Weiss Korea vs. Indutrade AB | Weiss Korea vs. Flow Traders NV | Weiss Korea vs. AfriTin Mining |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |