Correlation Between Dow Jones and Whitbread PLC
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Whitbread PLC 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 Whitbread PLC 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 Whitbread PLC, you can compare the effects of market volatilities on Dow Jones and Whitbread PLC 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 Whitbread PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Whitbread PLC.
Diversification Opportunities for Dow Jones and Whitbread PLC
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Whitbread is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Whitbread PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitbread 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 Whitbread PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitbread PLC has no effect on the direction of Dow Jones i.e., Dow Jones and Whitbread PLC go up and down completely randomly.
Pair Corralation between Dow Jones and Whitbread PLC
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.13 times more return on investment than Whitbread PLC. However, Dow Jones is 1.13 times more volatile than Whitbread PLC. It trades about 0.37 of its potential returns per unit of risk. Whitbread PLC is currently generating about -0.28 per unit of risk. If you would invest 4,176,346 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 314,719 from holding Dow Jones Industrial or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Dow Jones Industrial vs. Whitbread PLC
Performance |
| Timeline |
Dow Jones and Whitbread PLC Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Whitbread PLC
Pair trading matchups for Whitbread PLC
Pair Trading with Dow Jones and Whitbread PLC
The main advantage of trading using opposite Dow Jones and Whitbread PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Whitbread PLC 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 Whitbread PLC will offset losses from the drop in Whitbread PLC's long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| Whitbread PLC vs. Viridian Therapeutics | Whitbread PLC vs. CVR Energy | Whitbread PLC vs. Nationwide Building Society | Whitbread PLC vs. Dollar Tree |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Global Correlations Find global opportunities by holding instruments from different markets |