Correlation Between Dow Jones and Auxly Cannabis
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Auxly Cannabis 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 Auxly Cannabis 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 Auxly Cannabis Group, you can compare the effects of market volatilities on Dow Jones and Auxly Cannabis 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 Auxly Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Auxly Cannabis.
Diversification Opportunities for Dow Jones and Auxly Cannabis
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and Auxly is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Auxly Cannabis Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auxly Cannabis Group 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 Auxly Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auxly Cannabis Group has no effect on the direction of Dow Jones i.e., Dow Jones and Auxly Cannabis go up and down completely randomly.
Pair Corralation between Dow Jones and Auxly Cannabis
Assuming the 90 days trading horizon Dow Jones is expected to generate 22.2 times less return on investment than Auxly Cannabis. But when comparing it to its historical volatility, Dow Jones Industrial is 22.41 times less risky than Auxly Cannabis. It trades about 0.08 of its potential returns per unit of risk. Auxly Cannabis Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2.00 in Auxly Cannabis Group on August 30, 2024 and sell it today you would earn a total of 1.75 from holding Auxly Cannabis Group or generate 87.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Dow Jones Industrial vs. Auxly Cannabis Group
Performance |
| Timeline |
Dow Jones and Auxly Cannabis Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Auxly Cannabis Group
Pair trading matchups for Auxly Cannabis
Pair Trading with Dow Jones and Auxly Cannabis
The main advantage of trading using opposite Dow Jones and Auxly Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Auxly Cannabis 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 Auxly Cannabis will offset losses from the drop in Auxly Cannabis' long position.| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
| Auxly Cannabis vs. OrganiGram Holdings | Auxly Cannabis vs. Tilray Inc | Auxly Cannabis vs. Lifeist Wellness | Auxly Cannabis vs. Medipharm Labs Corp |
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.
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