Correlation Between Green Century and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Green Century 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 Green Century and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Green Century Equity and Dow Jones Industrial, you can compare the effects of market volatilities on Green Century 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 Green Century with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green Century and Dow Jones.
Diversification Opportunities for Green Century and Dow Jones
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Green and Dow is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Green Century Equity 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 Green Century 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 Green Century Equity 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 Green Century i.e., Green Century and Dow Jones go up and down completely randomly.
Pair Corralation between Green Century and Dow Jones
Assuming the 90 days horizon Green Century Equity is expected to generate 1.26 times more return on investment than Dow Jones. However, Green Century is 1.26 times more volatile than Dow Jones Industrial. It trades about 0.1 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 6,141 in Green Century Equity on August 29, 2024 and sell it today you would earn a total of 3,223 from holding Green Century Equity or generate 52.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Green Century Equity vs. Dow Jones Industrial
Performance |
| Timeline |
Green Century and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Green Century Equity
Pair trading matchups for Green Century
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Green Century and Dow Jones
The main advantage of trading using opposite Green Century and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Green Century 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.| Green Century vs. Green Century Balanced | Green Century vs. Portfolio 21 Global | Green Century vs. New Alternatives Fund | Green Century vs. Pax Esg Beta |
| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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