Correlation Between Global Li-Ion and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Global Li-Ion 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 Global Li-Ion and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Li Ion Graphite and Dow Jones Industrial, you can compare the effects of market volatilities on Global Li-Ion 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 Global Li-Ion with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Li-Ion and Dow Jones.
Diversification Opportunities for Global Li-Ion and Dow Jones
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Global and Dow is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Global Li Ion Graphite 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 Global Li-Ion 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 Global Li Ion Graphite 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 Global Li-Ion i.e., Global Li-Ion and Dow Jones go up and down completely randomly.
Pair Corralation between Global Li-Ion and Dow Jones
Assuming the 90 days horizon Global Li Ion Graphite is expected to generate 28.16 times more return on investment than Dow Jones. However, Global Li-Ion is 28.16 times more volatile than Dow Jones Industrial. It trades about 0.25 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.34 per unit of risk. If you would invest 1.24 in Global Li Ion Graphite on November 3, 2024 and sell it today you would earn a total of 1.45 from holding Global Li Ion Graphite or generate 116.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Global Li Ion Graphite vs. Dow Jones Industrial
Performance |
| Timeline |
Global Li-Ion and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Global Li Ion Graphite
Pair trading matchups for Global Li-Ion
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Global Li-Ion and Dow Jones
The main advantage of trading using opposite Global Li-Ion and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Li-Ion 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.| Global Li-Ion vs. Nova Lithium Corp | Global Li-Ion vs. Qubec Nickel Corp | Global Li-Ion vs. SPC Nickel Corp | Global Li-Ion vs. CDN Maverick Capital |
| Dow Jones vs. Cincinnati Financial | Dow Jones vs. Kellanova | Dow Jones vs. Acme United | Dow Jones vs. Procter Gamble |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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