Correlation Between Green Star and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Green Star 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 Green Star and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Green Star Products and Dow Jones Industrial, you can compare the effects of market volatilities on Green Star 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 Green Star with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green Star and Dow Jones.
Diversification Opportunities for Green Star and Dow Jones
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Green and Dow is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Green Star Products 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 Green Star 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 Green Star Products 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 Green Star i.e., Green Star and Dow Jones go up and down completely randomly.
Pair Corralation between Green Star and Dow Jones
Given the investment horizon of 90 days Green Star Products is expected to generate 17.38 times more return on investment than Dow Jones. However, Green Star is 17.38 times more volatile than Dow Jones Industrial. It trades about 0.08 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.27 per unit of risk. If you would invest 0.11 in Green Star Products on August 30, 2024 and sell it today you would earn a total of 0.00 from holding Green Star Products or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Green Star Products vs. Dow Jones Industrial
Performance |
| Timeline |
Green Star and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Green Star Products
Pair trading matchups for Green Star
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Green Star and Dow Jones
The main advantage of trading using opposite Green Star and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Green Star 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.| Green Star vs. Akzo Nobel NV | Green Star vs. Avoca LLC | Green Star vs. Arkema SA ADR | Green Star vs. HUMANA INC |
| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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