Correlation Between EROAD and Dow Jones
Can any of the company-specific risk be diversified away by investing in both EROAD 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 EROAD and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EROAD and Dow Jones Industrial, you can compare the effects of market volatilities on EROAD 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 EROAD with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of EROAD and Dow Jones.
Diversification Opportunities for EROAD and Dow Jones
Pay attention - limited upside
The 3 months correlation between EROAD and Dow is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding EROAD 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 EROAD 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 EROAD 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 EROAD i.e., EROAD and Dow Jones go up and down completely randomly.
Pair Corralation between EROAD and Dow Jones
Assuming the 90 days trading horizon EROAD is expected to generate 6.86 times more return on investment than Dow Jones. However, EROAD is 6.86 times more volatile than Dow Jones Industrial. It trades about 0.02 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of risk. If you would invest 93.00 in EROAD on August 25, 2024 and sell it today you would lose (9.00) from holding EROAD or give up 9.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.4% |
| Values | Daily Returns |
EROAD vs. Dow Jones Industrial
Performance |
| Timeline |
EROAD and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
EROAD
Pair trading matchups for EROAD
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with EROAD and Dow Jones
The main advantage of trading using opposite EROAD and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EROAD 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.| EROAD vs. National Storage REIT | EROAD vs. Aussie Broadband | EROAD vs. Neurotech International | EROAD vs. Data3 |
| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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