Correlation Between BetaPro Crude and Dow Jones
Can any of the company-specific risk be diversified away by investing in both BetaPro Crude 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 BetaPro Crude and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BetaPro Crude Oil and Dow Jones Industrial, you can compare the effects of market volatilities on BetaPro Crude 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 BetaPro Crude with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro Crude and Dow Jones.
Diversification Opportunities for BetaPro Crude and Dow Jones
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BetaPro and Dow is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro Crude Oil 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 BetaPro Crude 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 BetaPro Crude Oil 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 BetaPro Crude i.e., BetaPro Crude and Dow Jones go up and down completely randomly.
Pair Corralation between BetaPro Crude and Dow Jones
Assuming the 90 days trading horizon BetaPro Crude Oil is expected to generate 3.53 times more return on investment than Dow Jones. However, BetaPro Crude is 3.53 times more volatile than Dow Jones Industrial. It trades about 0.48 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.1 per unit of risk. If you would invest 1,174 in BetaPro Crude Oil on October 22, 2024 and sell it today you would earn a total of 296.00 from holding BetaPro Crude Oil or generate 25.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
BetaPro Crude Oil vs. Dow Jones Industrial
Performance |
| Timeline |
BetaPro Crude and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
BetaPro Crude Oil
Pair trading matchups for BetaPro Crude
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with BetaPro Crude and Dow Jones
The main advantage of trading using opposite BetaPro Crude and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro Crude 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.| BetaPro Crude vs. BetaPro Gold Bullion | BetaPro Crude vs. BetaPro NASDAQ 100 2x | BetaPro Crude vs. BetaPro SP TSX | BetaPro Crude vs. BetaPro SP TSX |
| Dow Jones vs. Nasdaq Inc | Dow Jones vs. Summit Materials | Dow Jones vs. Vulcan Materials | Dow Jones vs. Celsius Holdings |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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