Correlation Between Globalink Investment and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Globalink Investment 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 Globalink Investment and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globalink Investment and Dow Jones Industrial, you can compare the effects of market volatilities on Globalink Investment 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 Globalink Investment with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globalink Investment and Dow Jones.
Diversification Opportunities for Globalink Investment and Dow Jones
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Globalink and Dow is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Globalink Investment 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 Globalink Investment 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 Globalink Investment 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 Globalink Investment i.e., Globalink Investment and Dow Jones go up and down completely randomly.
Pair Corralation between Globalink Investment and Dow Jones
Given the investment horizon of 90 days Globalink Investment is expected to generate 6.18 times less return on investment than Dow Jones. But when comparing it to its historical volatility, Globalink Investment is 2.5 times less risky than Dow Jones. It trades about 0.06 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 3,885,286 in Dow Jones Industrial on August 26, 2024 and sell it today you would earn a total of 544,365 from holding Dow Jones Industrial or generate 14.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Globalink Investment vs. Dow Jones Industrial
Performance |
| Timeline |
Globalink Investment and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Globalink Investment
Pair trading matchups for Globalink Investment
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Globalink Investment and Dow Jones
The main advantage of trading using opposite Globalink Investment and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globalink Investment 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.| Globalink Investment vs. Healthcare AI Acquisition | Globalink Investment vs. Metal Sky Star | Globalink Investment vs. Patria Latin American | Globalink Investment vs. Target Global Acquisition |
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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 Valuation module to check real value of public entities based on technical and fundamental data.
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