Correlation Between Embrace Change and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Embrace Change 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 Embrace Change and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Embrace Change Acquisition and Dow Jones Industrial, you can compare the effects of market volatilities on Embrace Change 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 Embrace Change with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embrace Change and Dow Jones.
Diversification Opportunities for Embrace Change and Dow Jones
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Embrace and Dow is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Embrace Change Acquisition 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 Embrace Change 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 Embrace Change Acquisition 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 Embrace Change i.e., Embrace Change and Dow Jones go up and down completely randomly.
Pair Corralation between Embrace Change and Dow Jones
Given the investment horizon of 90 days Embrace Change is expected to generate 5.94 times less return on investment than Dow Jones. But when comparing it to its historical volatility, Embrace Change Acquisition is 4.15 times less risky than Dow Jones. It trades about 0.1 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 4,251,495 in Dow Jones Industrial on August 24, 2024 and sell it today you would earn a total of 135,540 from holding Dow Jones Industrial or generate 3.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Embrace Change Acquisition vs. Dow Jones Industrial
Performance |
| Timeline |
Embrace Change and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Embrace Change Acquisition
Pair trading matchups for Embrace Change
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Embrace Change and Dow Jones
The main advantage of trading using opposite Embrace Change and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embrace Change 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.| Embrace Change vs. China Health Management | Embrace Change vs. Absolute Health and | Embrace Change vs. Supurva Healthcare Group | Embrace Change vs. TransAKT |
| Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. Titan Machinery | Dow Jones vs. Simon Property Group |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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