Correlation Between Henderson High and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Henderson High 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 Henderson High and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Henderson High Income and Dow Jones Industrial, you can compare the effects of market volatilities on Henderson High 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 Henderson High with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Henderson High and Dow Jones.
Diversification Opportunities for Henderson High and Dow Jones
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Henderson and Dow is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Henderson High Income 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 Henderson High 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 Henderson High Income 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 Henderson High i.e., Henderson High and Dow Jones go up and down completely randomly.
Pair Corralation between Henderson High and Dow Jones
Assuming the 90 days trading horizon Henderson High is expected to generate 4.62 times less return on investment than Dow Jones. In addition to that, Henderson High is 1.27 times more volatile than Dow Jones Industrial. It trades about 0.05 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.29 per unit of volatility. If you would invest 4,273,213 in Dow Jones Industrial on November 4, 2024 and sell it today you would earn a total of 181,253 from holding Dow Jones Industrial or generate 4.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Henderson High Income vs. Dow Jones Industrial
Performance |
| Timeline |
Henderson High and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Henderson High Income
Pair trading matchups for Henderson High
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Henderson High and Dow Jones
The main advantage of trading using opposite Henderson High and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Henderson High 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.| Henderson High vs. Made Tech Group | Henderson High vs. TechnipFMC PLC | Henderson High vs. Learning Technologies Group | Henderson High vs. Symphony Environmental Technologies |
| Dow Jones vs. Rambler Metals and | Dow Jones vs. Nicola Mining | Dow Jones vs. Old Dominion Freight | Dow Jones vs. United Guardian |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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