Correlation Between Eddy Smart and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Eddy Smart 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 Eddy Smart and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eddy Smart Home and Dow Jones Industrial, you can compare the effects of market volatilities on Eddy Smart 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 Eddy Smart with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eddy Smart and Dow Jones.
Diversification Opportunities for Eddy Smart and Dow Jones
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eddy and Dow is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Eddy Smart Home 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 Eddy Smart 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 Eddy Smart Home 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 Eddy Smart i.e., Eddy Smart and Dow Jones go up and down completely randomly.
Pair Corralation between Eddy Smart and Dow Jones
Assuming the 90 days horizon Eddy Smart Home is expected to generate 15.59 times more return on investment than Dow Jones. However, Eddy Smart is 15.59 times more volatile than Dow Jones Industrial. It trades about 0.09 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.29 per unit of risk. If you would invest 240.00 in Eddy Smart Home on November 4, 2024 and sell it today you would earn a total of 26.00 from holding Eddy Smart Home or generate 10.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Eddy Smart Home vs. Dow Jones Industrial
Performance |
| Timeline |
Eddy Smart and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Eddy Smart Home
Pair trading matchups for Eddy Smart
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Eddy Smart and Dow Jones
The main advantage of trading using opposite Eddy Smart and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eddy Smart 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.| Eddy Smart vs. Simply Better Brands | Eddy Smart vs. Forward Water Technologies | Eddy Smart vs. Pulse Oil Corp | Eddy Smart vs. iShares Canadian HYBrid |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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