Correlation Between Greentech Metals and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Greentech Metals 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 Greentech Metals and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Greentech Metals and Dow Jones Industrial, you can compare the effects of market volatilities on Greentech Metals 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 Greentech Metals with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Greentech Metals and Dow Jones.
Diversification Opportunities for Greentech Metals and Dow Jones
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Greentech and Dow is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Greentech Metals 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 Greentech Metals 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 Greentech Metals 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 Greentech Metals i.e., Greentech Metals and Dow Jones go up and down completely randomly.
Pair Corralation between Greentech Metals and Dow Jones
Assuming the 90 days trading horizon Greentech Metals is expected to generate 19.79 times more return on investment than Dow Jones. However, Greentech Metals is 19.79 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 0.07 per unit of risk. If you would invest 15.00 in Greentech Metals on August 24, 2024 and sell it today you would lose (5.50) from holding Greentech Metals or give up 36.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.4% |
| Values | Daily Returns |
Greentech Metals vs. Dow Jones Industrial
Performance |
| Timeline |
Greentech Metals and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Greentech Metals
Pair trading matchups for Greentech Metals
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Greentech Metals and Dow Jones
The main advantage of trading using opposite Greentech Metals and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Greentech Metals 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.| Greentech Metals vs. Stelar Metals | Greentech Metals vs. Duxton Broadacre Farms | Greentech Metals vs. TPG Telecom | Greentech Metals vs. Lendlease Group |
| Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. Titan Machinery | Dow Jones vs. Simon Property Group |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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