Correlation Between Dow Jones and Elkhorn
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Elkhorn 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 Elkhorn 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 Elkhorn, you can compare the effects of market volatilities on Dow Jones and Elkhorn 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 Elkhorn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Elkhorn.
Diversification Opportunities for Dow Jones and Elkhorn
Poor diversification
The 3 months correlation between Dow and Elkhorn is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Elkhorn in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elkhorn 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 Elkhorn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elkhorn has no effect on the direction of Dow Jones i.e., Dow Jones and Elkhorn go up and down completely randomly.
Pair Corralation between Dow Jones and Elkhorn
If you would invest 4,238,757 in Dow Jones Industrial on August 28, 2024 and sell it today you would earn a total of 247,274 from holding Dow Jones Industrial or generate 5.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.55% |
| Values | Daily Returns |
Dow Jones Industrial vs. Elkhorn
Performance |
| Timeline |
Dow Jones and Elkhorn Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Elkhorn
Pair trading matchups for Elkhorn
Pair Trading with Dow Jones and Elkhorn
The main advantage of trading using opposite Dow Jones and Elkhorn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Elkhorn 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 Elkhorn will offset losses from the drop in Elkhorn's long position.| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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