Correlation Between Eastern Commercial and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Eastern Commercial 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 Eastern Commercial and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Commercial Leasing and Dow Jones Industrial, you can compare the effects of market volatilities on Eastern Commercial 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 Eastern Commercial with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Commercial and Dow Jones.
Diversification Opportunities for Eastern Commercial and Dow Jones
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Eastern and Dow is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Commercial Leasing 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 Eastern Commercial 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 Eastern Commercial Leasing 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 Eastern Commercial i.e., Eastern Commercial and Dow Jones go up and down completely randomly.
Pair Corralation between Eastern Commercial and Dow Jones
Assuming the 90 days trading horizon Eastern Commercial Leasing is expected to generate 93.21 times more return on investment than Dow Jones. However, Eastern Commercial is 93.21 times more volatile than Dow Jones Industrial. It trades about 0.06 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 148.00 in Eastern Commercial Leasing on August 29, 2024 and sell it today you would lose (32.00) from holding Eastern Commercial Leasing or give up 21.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.39% |
| Values | Daily Returns |
Eastern Commercial Leasing vs. Dow Jones Industrial
Performance |
| Timeline |
Eastern Commercial and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Eastern Commercial Leasing
Pair trading matchups for Eastern Commercial
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Eastern Commercial and Dow Jones
The main advantage of trading using opposite Eastern Commercial and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Commercial 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.| Eastern Commercial vs. Karmarts Public | Eastern Commercial vs. Kang Yong Electric | Eastern Commercial vs. Kiatnakin Phatra Bank | Eastern Commercial vs. SCG PACKAGING PCL NVDR |
| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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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