Correlation Between China DatangRenewable and Dow Jones
Can any of the company-specific risk be diversified away by investing in both China DatangRenewable and Dow Jones 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 China DatangRenewable and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Datang and Dow Jones Industrial, you can compare the effects of market volatilities on China DatangRenewable and Dow Jones 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 China DatangRenewable with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of China DatangRenewable and Dow Jones.
Diversification Opportunities for China DatangRenewable and Dow Jones
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Dow is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding China Datang and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and China DatangRenewable 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 China Datang are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of China DatangRenewable i.e., China DatangRenewable and Dow Jones go up and down completely randomly.
Pair Corralation between China DatangRenewable and Dow Jones
Assuming the 90 days horizon China Datang is expected to generate 6.67 times more return on investment than Dow Jones. However, China DatangRenewable is 6.67 times more volatile than Dow Jones Industrial. It trades about 0.08 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.13 per unit of risk. If you would invest 11.00 in China Datang on September 3, 2024 and sell it today you would earn a total of 12.00 from holding China Datang or generate 109.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.41% |
| Values | Daily Returns |
China Datang vs. Dow Jones Industrial
Performance |
| Timeline |
China DatangRenewable and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
China Datang
Pair trading matchups for China DatangRenewable
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with China DatangRenewable and Dow Jones
The main advantage of trading using opposite China DatangRenewable and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China DatangRenewable position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| China DatangRenewable vs. The Southern | China DatangRenewable vs. VERBUND AG | China DatangRenewable vs. American Electric Power | China DatangRenewable vs. Xcel Energy |
| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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