Correlation Between Global Clean and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Global Clean 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 Clean 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 Clean Energy and Dow Jones Industrial, you can compare the effects of market volatilities on Global Clean 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 Clean with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Clean and Dow Jones.
Diversification Opportunities for Global Clean and Dow Jones
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Global and Dow is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Global Clean Energy 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 Clean 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 Clean Energy 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 Clean i.e., Global Clean and Dow Jones go up and down completely randomly.
Pair Corralation between Global Clean and Dow Jones
Given the investment horizon of 90 days Global Clean Energy is expected to under-perform the Dow Jones. In addition to that, Global Clean is 8.46 times more volatile than Dow Jones Industrial. It trades about -0.42 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.17 per unit of volatility. If you would invest 4,329,703 in Dow Jones Industrial on October 26, 2024 and sell it today you would earn a total of 112,722 from holding Dow Jones Industrial or generate 2.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Global Clean Energy vs. Dow Jones Industrial
Performance |
| Timeline |
Global Clean and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Global Clean Energy
Pair trading matchups for Global Clean
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Global Clean and Dow Jones
The main advantage of trading using opposite Global Clean and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Clean 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 Clean vs. Edible Garden AG | Global Clean vs. Golden Agri Resources | Global Clean vs. Local Bounti Corp | Global Clean vs. Village Farms International |
| Dow Jones vs. Asure Software | Dow Jones vs. Amkor Technology | Dow Jones vs. Radcom | Dow Jones vs. Senmiao Technology |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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