Correlation Between Dow Jones and Aberdeen Japan
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Aberdeen Japan 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 Aberdeen Japan 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 Aberdeen Japan Equity, you can compare the effects of market volatilities on Dow Jones and Aberdeen Japan 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 Aberdeen Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Aberdeen Japan.
Diversification Opportunities for Dow Jones and Aberdeen Japan
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and Aberdeen is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Aberdeen Japan Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Japan Equity 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 Aberdeen Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Japan Equity has no effect on the direction of Dow Jones i.e., Dow Jones and Aberdeen Japan go up and down completely randomly.
Pair Corralation between Dow Jones and Aberdeen Japan
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.81 times more return on investment than Aberdeen Japan. However, Dow Jones Industrial is 1.24 times less risky than Aberdeen Japan. It trades about 0.03 of its potential returns per unit of risk. Aberdeen Japan Equity is currently generating about -0.1 per unit of risk. If you would invest 4,233,015 in Dow Jones Industrial on September 29, 2024 and sell it today you would earn a total of 66,206 from holding Dow Jones Industrial or generate 1.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Aberdeen Japan Equity
Performance |
| Timeline |
Dow Jones and Aberdeen Japan Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Aberdeen Japan Equity
Pair trading matchups for Aberdeen Japan
Pair Trading with Dow Jones and Aberdeen Japan
The main advantage of trading using opposite Dow Jones and Aberdeen Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Aberdeen Japan 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 Aberdeen Japan will offset losses from the drop in Aberdeen Japan's long position.| Dow Jones vs. Eldorado Gold Corp | Dow Jones vs. Flexible Solutions International | Dow Jones vs. Olympic Steel | Dow Jones vs. Valhi Inc |
| Aberdeen Japan vs. Aqr Diversified Arbitrage | Aberdeen Japan vs. Wilmington Diversified Income | Aberdeen Japan vs. Tax Free Conservative Income | Aberdeen Japan vs. Fidelity Advisor Diversified |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |