Correlation Between Power Global and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Power Global 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 Power Global and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Global Tactical and Dow Jones Industrial, you can compare the effects of market volatilities on Power Global 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 Power Global with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Global and Dow Jones.
Diversification Opportunities for Power Global and Dow Jones
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Power and Dow is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Power Global Tactical 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 Power Global 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 Power Global Tactical 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 Power Global i.e., Power Global and Dow Jones go up and down completely randomly.
Pair Corralation between Power Global and Dow Jones
Assuming the 90 days horizon Power Global is expected to generate 1.23 times less return on investment than Dow Jones. But when comparing it to its historical volatility, Power Global Tactical is 1.39 times less risky than Dow Jones. It trades about 0.1 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 3,351,765 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 1,139,300 from holding Dow Jones Industrial or generate 33.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.79% |
| Values | Daily Returns |
Power Global Tactical vs. Dow Jones Industrial
Performance |
| Timeline |
Power Global and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Power Global Tactical
Pair trading matchups for Power Global
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Power Global and Dow Jones
The main advantage of trading using opposite Power Global and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Global 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.| Power Global vs. All Asset Fund | Power Global vs. Pimco All Asset | Power Global vs. All Asset Fund | Power Global vs. All Asset Fund |
| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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