Correlation Between Dow Jones and Zebra Technologies
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Zebra Technologies 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 Zebra Technologies 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 Zebra Technologies, you can compare the effects of market volatilities on Dow Jones and Zebra Technologies 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 Zebra Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Zebra Technologies.
Diversification Opportunities for Dow Jones and Zebra Technologies
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dow and Zebra is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Zebra Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zebra Technologies 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 Zebra Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zebra Technologies has no effect on the direction of Dow Jones i.e., Dow Jones and Zebra Technologies go up and down completely randomly.
Pair Corralation between Dow Jones and Zebra Technologies
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the Zebra Technologies. But the index apears to be less risky and, when comparing its historical volatility, Dow Jones Industrial is 1.9 times less risky than Zebra Technologies. The index trades about -0.02 of its potential returns per unit of risk. The Zebra Technologies is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 6,935 in Zebra Technologies on October 12, 2024 and sell it today you would earn a total of 993.00 from holding Zebra Technologies or generate 14.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 93.55% |
| Values | Daily Returns |
Dow Jones Industrial vs. Zebra Technologies
Performance |
| Timeline |
Dow Jones and Zebra Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Zebra Technologies
Pair trading matchups for Zebra Technologies
Pair Trading with Dow Jones and Zebra Technologies
The main advantage of trading using opposite Dow Jones and Zebra Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Zebra Technologies 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 Zebra Technologies will offset losses from the drop in Zebra Technologies' long position.| Dow Jones vs. Toro | Dow Jones vs. Foot Locker | Dow Jones vs. Abercrombie Fitch | Dow Jones vs. 51Talk Online Education |
| Zebra Technologies vs. Cisco Systems | Zebra Technologies vs. Motorola Solutions | Zebra Technologies vs. Nokia Oyj | Zebra Technologies vs. Intelbras SA |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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