Correlation Between Global Medical and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Global Medical 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 Medical 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 Medical REIT and Dow Jones Industrial, you can compare the effects of market volatilities on Global Medical 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 Medical with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Medical and Dow Jones.
Diversification Opportunities for Global Medical and Dow Jones
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Global and Dow is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Global Medical REIT 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 Medical 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 Medical REIT 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 Medical i.e., Global Medical and Dow Jones go up and down completely randomly.
Pair Corralation between Global Medical and Dow Jones
Assuming the 90 days trading horizon Global Medical is expected to generate 1.88 times less return on investment than Dow Jones. But when comparing it to its historical volatility, Global Medical REIT is 1.05 times less risky than Dow Jones. It trades about 0.05 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,363,061 in Dow Jones Industrial on August 28, 2024 and sell it today you would earn a total of 1,110,596 from holding Dow Jones Industrial or generate 33.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Medical REIT vs. Dow Jones Industrial
Performance |
| Timeline |
Global Medical and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Global Medical REIT
Pair trading matchups for Global Medical
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Global Medical and Dow Jones
The main advantage of trading using opposite Global Medical and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Medical 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 Medical vs. Global Medical REIT | Global Medical vs. Community Healthcare Trust | Global Medical vs. National Health Investors | Global Medical vs. Healthcare Realty Trust |
| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Stocks Directory Find actively traded stocks across global markets | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Global Correlations Find global opportunities by holding instruments from different markets |