Correlation Between Elfun Government and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Elfun Government 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 Elfun Government and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elfun Government Money and Dow Jones Industrial, you can compare the effects of market volatilities on Elfun Government 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 Elfun Government with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elfun Government and Dow Jones.
Diversification Opportunities for Elfun Government and Dow Jones
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Elfun and Dow is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Elfun Government Money 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 Elfun Government 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 Elfun Government Money 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 Elfun Government i.e., Elfun Government and Dow Jones go up and down completely randomly.
Pair Corralation between Elfun Government and Dow Jones
Assuming the 90 days horizon Elfun Government Money is expected to generate 32.51 times more return on investment than Dow Jones. However, Elfun Government is 32.51 times more volatile than Dow Jones Industrial. It trades about 0.04 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.11 per unit of risk. If you would invest 94.00 in Elfun Government Money on September 4, 2024 and sell it today you would earn a total of 6.00 from holding Elfun Government Money or generate 6.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 98.42% |
| Values | Daily Returns |
Elfun Government Money vs. Dow Jones Industrial
Performance |
| Timeline |
Elfun Government and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Elfun Government Money
Pair trading matchups for Elfun Government
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Elfun Government and Dow Jones
The main advantage of trading using opposite Elfun Government and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elfun Government 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.| Elfun Government vs. Dreyfus Natural Resources | Elfun Government vs. Gamco Natural Resources | Elfun Government vs. Adams Natural Resources | Elfun Government vs. Gmo Resources |
| Dow Jones vs. Gentex | Dow Jones vs. American Axle Manufacturing | Dow Jones vs. Pearson PLC ADR | Dow Jones vs. Marine Products |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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