Correlation Between First Graphene and Dow
Can any of the company-specific risk be diversified away by investing in both First Graphene and Dow 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 First Graphene and Dow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Graphene and Dow Inc, you can compare the effects of market volatilities on First Graphene and Dow 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 First Graphene with a short position of Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Graphene and Dow.
Diversification Opportunities for First Graphene and Dow
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Dow is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding First Graphene and Dow Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Inc and First Graphene 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 First Graphene are associated (or correlated) with Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Inc has no effect on the direction of First Graphene i.e., First Graphene and Dow go up and down completely randomly.
Pair Corralation between First Graphene and Dow
Assuming the 90 days horizon First Graphene is expected to under-perform the Dow. In addition to that, First Graphene is 6.31 times more volatile than Dow Inc. It trades about -0.11 of its total potential returns per unit of risk. Dow Inc is currently generating about -0.26 per unit of volatility. If you would invest 5,011 in Dow Inc on August 28, 2024 and sell it today you would lose (424.00) from holding Dow Inc or give up 8.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
First Graphene vs. Dow Inc
Performance |
| Timeline |
| First Graphene |
| Dow Inc |
First Graphene and Dow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Graphene and Dow
The main advantage of trading using opposite First Graphene and Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Graphene position performs unexpectedly, Dow 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 will offset losses from the drop in Dow's long position.| First Graphene vs. Haydale Graphene Industries | First Graphene vs. Versarien plc | First Graphene vs. NanoXplore | First Graphene vs. G6 Materials Corp |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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