Correlation Between HE Equipment and Dow Jones
Can any of the company-specific risk be diversified away by investing in both HE Equipment 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 HE Equipment and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HE Equipment Services and Dow Jones Industrial, you can compare the effects of market volatilities on HE Equipment 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 HE Equipment with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of HE Equipment and Dow Jones.
Diversification Opportunities for HE Equipment and Dow Jones
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between HEES and Dow is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding HE Equipment Services 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 HE Equipment 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 HE Equipment Services 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 HE Equipment i.e., HE Equipment and Dow Jones go up and down completely randomly.
Pair Corralation between HE Equipment and Dow Jones
Given the investment horizon of 90 days HE Equipment Services is expected to generate 3.66 times more return on investment than Dow Jones. However, HE Equipment is 3.66 times more volatile than Dow Jones Industrial. It trades about 0.11 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.26 per unit of risk. If you would invest 5,659 in HE Equipment Services on August 28, 2024 and sell it today you would earn a total of 420.00 from holding HE Equipment Services or generate 7.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
HE Equipment Services vs. Dow Jones Industrial
Performance |
| Timeline |
HE Equipment and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
HE Equipment Services
Pair trading matchups for HE Equipment
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with HE Equipment and Dow Jones
The main advantage of trading using opposite HE Equipment and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HE Equipment 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.| HE Equipment vs. GATX Corporation | HE Equipment vs. McGrath RentCorp | HE Equipment vs. Alta Equipment Group | HE Equipment vs. Ryder System |
| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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