Correlation Between Essential Energy and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Essential Energy 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 Essential Energy and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Essential Energy Services and Dow Jones Industrial, you can compare the effects of market volatilities on Essential Energy 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 Essential Energy with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Essential Energy and Dow Jones.
Diversification Opportunities for Essential Energy and Dow Jones
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Essential and Dow is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Essential Energy Services 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 Essential Energy 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 Essential Energy Services 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 Essential Energy i.e., Essential Energy and Dow Jones go up and down completely randomly.
Pair Corralation between Essential Energy and Dow Jones
If you would invest 3,857,103 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 633,962 from holding Dow Jones Industrial or generate 16.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 0.79% |
| Values | Daily Returns |
Essential Energy Services vs. Dow Jones Industrial
Performance |
| Timeline |
Essential Energy and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Essential Energy Services
Pair trading matchups for Essential Energy
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Essential Energy and Dow Jones
The main advantage of trading using opposite Essential Energy and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Essential Energy 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.| Essential Energy vs. Source Energy Services | Essential Energy vs. Total Energy Services | Essential Energy vs. Trican Well Service | Essential Energy vs. STEP Energy Services |
| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |