Correlation Between Electra Co and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Electra Co 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 Electra Co and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electra Co Pr and Dow Jones Industrial, you can compare the effects of market volatilities on Electra Co 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 Electra Co with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electra Co and Dow Jones.
Diversification Opportunities for Electra Co and Dow Jones
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Electra and Dow is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Electra Co Pr 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 Electra Co 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 Electra Co Pr 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 Electra Co i.e., Electra Co and Dow Jones go up and down completely randomly.
Pair Corralation between Electra Co and Dow Jones
Assuming the 90 days trading horizon Electra Co Pr is expected to generate 3.73 times more return on investment than Dow Jones. However, Electra Co is 3.73 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 0.15 per unit of risk. If you would invest 796,700 in Electra Co Pr on August 29, 2024 and sell it today you would earn a total of 153,300 from holding Electra Co Pr or generate 19.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 74.6% |
| Values | Daily Returns |
Electra Co Pr vs. Dow Jones Industrial
Performance |
| Timeline |
Electra Co and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Electra Co Pr
Pair trading matchups for Electra Co
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Electra Co and Dow Jones
The main advantage of trading using opposite Electra Co and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electra Co 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.| Electra Co vs. Clal Insurance Enterprises | Electra Co vs. Israel Discount Bank | Electra Co vs. Bezeq Israeli Telecommunication | Electra Co vs. Alony Hetz Properties |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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