Correlation Between Shift4 Payments and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Shift4 Payments 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 Shift4 Payments and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shift4 Payments and Dow Jones Industrial, you can compare the effects of market volatilities on Shift4 Payments 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 Shift4 Payments with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shift4 Payments and Dow Jones.
Diversification Opportunities for Shift4 Payments and Dow Jones
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shift4 and Dow is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Shift4 Payments 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 Shift4 Payments 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 Shift4 Payments 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 Shift4 Payments i.e., Shift4 Payments and Dow Jones go up and down completely randomly.
Pair Corralation between Shift4 Payments and Dow Jones
Given the investment horizon of 90 days Shift4 Payments is expected to generate 3.04 times more return on investment than Dow Jones. However, Shift4 Payments is 3.04 times more volatile than Dow Jones Industrial. It trades about 0.17 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.2 per unit of risk. If you would invest 11,424 in Shift4 Payments on November 18, 2024 and sell it today you would earn a total of 704.00 from holding Shift4 Payments or generate 6.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shift4 Payments vs. Dow Jones Industrial
Performance |
| Timeline |
Shift4 Payments and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Shift4 Payments
Pair trading matchups for Shift4 Payments
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Shift4 Payments and Dow Jones
The main advantage of trading using opposite Shift4 Payments and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shift4 Payments 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.| Shift4 Payments vs. SentinelOne | Shift4 Payments vs. Confluent | Shift4 Payments vs. Hashicorp | Shift4 Payments vs. MongoDB |
| Dow Jones vs. Palomar Holdings | Dow Jones vs. Mesa Air Group | Dow Jones vs. LATAM Airlines Group | Dow Jones vs. Unum 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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