Correlation Between Globe Telecom and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Globe Telecom 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 Globe Telecom and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globe Telecom and Dow Jones Industrial, you can compare the effects of market volatilities on Globe Telecom 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 Globe Telecom with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globe Telecom and Dow Jones.
Diversification Opportunities for Globe Telecom and Dow Jones
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Globe and Dow is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Globe Telecom 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 Globe Telecom 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 Globe Telecom 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 Globe Telecom i.e., Globe Telecom and Dow Jones go up and down completely randomly.
Pair Corralation between Globe Telecom and Dow Jones
Assuming the 90 days trading horizon Globe Telecom is expected to generate 1.96 times more return on investment than Dow Jones. However, Globe Telecom is 1.96 times more volatile than Dow Jones Industrial. It trades about 0.06 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.11 per unit of risk. If you would invest 156,068 in Globe Telecom on August 26, 2024 and sell it today you would earn a total of 53,932 from holding Globe Telecom or generate 34.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.46% |
| Values | Daily Returns |
Globe Telecom vs. Dow Jones Industrial
Performance |
| Timeline |
Globe Telecom and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Globe Telecom
Pair trading matchups for Globe Telecom
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Globe Telecom and Dow Jones
The main advantage of trading using opposite Globe Telecom and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globe Telecom 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.| Globe Telecom vs. PLDT Inc | Globe Telecom vs. Allhome Corp | Globe Telecom vs. Jollibee Foods Corp | Globe Telecom vs. LFM Properties Corp |
| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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