Correlation Between Green Technology and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Green Technology 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 Technology 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 Technology Metals and Dow Jones Industrial, you can compare the effects of market volatilities on Green Technology 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 Technology with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green Technology and Dow Jones.
Diversification Opportunities for Green Technology and Dow Jones
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Green and Dow is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Green Technology 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 Green Technology 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 Technology 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 Green Technology i.e., Green Technology and Dow Jones go up and down completely randomly.
Pair Corralation between Green Technology and Dow Jones
Assuming the 90 days trading horizon Green Technology Metals is expected to under-perform the Dow Jones. In addition to that, Green Technology is 7.43 times more volatile than Dow Jones Industrial. It trades about -0.09 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.11 per unit of volatility. If you would invest 3,361,869 in Dow Jones Industrial on August 29, 2024 and sell it today you would earn a total of 1,124,162 from holding Dow Jones Industrial or generate 33.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.74% |
| Values | Daily Returns |
Green Technology Metals vs. Dow Jones Industrial
Performance |
| Timeline |
Green Technology and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Green Technology Metals
Pair trading matchups for Green Technology
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Green Technology and Dow Jones
The main advantage of trading using opposite Green Technology and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Green Technology 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 Technology vs. Northern Star Resources | Green Technology vs. Evolution Mining | Green Technology vs. Bluescope Steel | Green Technology vs. Sandfire Resources NL |
| 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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