Correlation Between Dow Jones and God Bless
Can any of the company-specific risk be diversified away by investing in both Dow Jones and God Bless 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 God Bless 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 God Bless America, you can compare the effects of market volatilities on Dow Jones and God Bless 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 God Bless. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and God Bless.
Diversification Opportunities for Dow Jones and God Bless
Almost no diversification
The 3 months correlation between Dow and God is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and God Bless America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on God Bless America 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 God Bless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of God Bless America has no effect on the direction of Dow Jones i.e., Dow Jones and God Bless go up and down completely randomly.
Pair Corralation between Dow Jones and God Bless
Assuming the 90 days trading horizon Dow Jones is expected to generate 2.14 times less return on investment than God Bless. But when comparing it to its historical volatility, Dow Jones Industrial is 1.37 times less risky than God Bless. It trades about 0.09 of its potential returns per unit of risk. God Bless America is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,234 in God Bless America on September 8, 2024 and sell it today you would earn a total of 1,795 from holding God Bless America or generate 80.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. God Bless America
Performance |
| Timeline |
Dow Jones and God Bless Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
God Bless America
Pair trading matchups for God Bless
Pair Trading with Dow Jones and God Bless
The main advantage of trading using opposite Dow Jones and God Bless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, God Bless 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 God Bless will offset losses from the drop in God Bless' long position.| Dow Jones vs. Parker Hannifin | Dow Jones vs. Cementos Pacasmayo SAA | Dow Jones vs. Live Ventures | Dow Jones vs. EMCOR Group |
| God Bless vs. Point Bridge GOP | God Bless vs. EA Series Trust | God Bless vs. EA Series Trust | God Bless vs. ETF Opportunities Trust |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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