Correlation Between General Environmental and Dow Jones
Can any of the company-specific risk be diversified away by investing in both General Environmental 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 General Environmental and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Environmental Conservation and Dow Jones Industrial, you can compare the effects of market volatilities on General Environmental 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 General Environmental with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Environmental and Dow Jones.
Diversification Opportunities for General Environmental and Dow Jones
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between General and Dow is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding General Environmental Conserva 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 General Environmental 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 General Environmental Conservation 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 General Environmental i.e., General Environmental and Dow Jones go up and down completely randomly.
Pair Corralation between General Environmental and Dow Jones
Assuming the 90 days trading horizon General Environmental Conservation is expected to generate 64.17 times more return on investment than Dow Jones. However, General Environmental is 64.17 times more volatile than Dow Jones Industrial. It trades about 0.04 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.09 per unit of risk. If you would invest 60.00 in General Environmental Conservation on September 5, 2024 and sell it today you would lose (12.00) from holding General Environmental Conservation or give up 20.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.58% |
| Values | Daily Returns |
General Environmental Conserva vs. Dow Jones Industrial
Performance |
| Timeline |
General Environmental and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
General Environmental Conservation
Pair trading matchups for General Environmental
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with General Environmental and Dow Jones
The main advantage of trading using opposite General Environmental and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Environmental 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.| General Environmental vs. Asia Aviation Public | General Environmental vs. Bangkok Dusit Medical | General Environmental vs. Bangkok Expressway and | General Environmental vs. Airports of Thailand |
| Dow Jones vs. Shake Shack | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. Dave Busters Entertainment | Dow Jones vs. Meli Hotels International |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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