Correlation Between Dana Large and Sp 500
Can any of the company-specific risk be diversified away by investing in both Dana Large and Sp 500 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 Dana Large and Sp 500 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dana Large Cap and Sp 500 Equal, you can compare the effects of market volatilities on Dana Large and Sp 500 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 Dana Large with a short position of Sp 500. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dana Large and Sp 500.
Diversification Opportunities for Dana Large and Sp 500
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Dana and INDEX is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Dana Large Cap and Sp 500 Equal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sp 500 Equal and Dana Large 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 Dana Large Cap are associated (or correlated) with Sp 500. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sp 500 Equal has no effect on the direction of Dana Large i.e., Dana Large and Sp 500 go up and down completely randomly.
Pair Corralation between Dana Large and Sp 500
Assuming the 90 days horizon Dana Large Cap is expected to generate 1.11 times more return on investment than Sp 500. However, Dana Large is 1.11 times more volatile than Sp 500 Equal. It trades about 0.34 of its potential returns per unit of risk. Sp 500 Equal is currently generating about 0.37 per unit of risk. If you would invest 2,563 in Dana Large Cap on September 3, 2024 and sell it today you would earn a total of 147.00 from holding Dana Large Cap or generate 5.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dana Large Cap vs. Sp 500 Equal
Performance |
| Timeline |
| Dana Large Cap |
| Sp 500 Equal |
Dana Large and Sp 500 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dana Large and Sp 500
The main advantage of trading using opposite Dana Large and Sp 500 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dana Large position performs unexpectedly, Sp 500 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 Sp 500 will offset losses from the drop in Sp 500's long position.| Dana Large vs. Msift High Yield | Dana Large vs. Gmo High Yield | Dana Large vs. Guggenheim High Yield | Dana Large vs. Pgim High Yield |
| Sp 500 vs. Lgm Risk Managed | Sp 500 vs. Siit High Yield | Sp 500 vs. T Rowe Price | Sp 500 vs. Vanguard Star Fund |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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