Correlation Between JERICHO OIL and Dow Jones
Can any of the company-specific risk be diversified away by investing in both JERICHO OIL 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 JERICHO OIL and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JERICHO OIL and Dow Jones Industrial, you can compare the effects of market volatilities on JERICHO OIL 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 JERICHO OIL with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of JERICHO OIL and Dow Jones.
Diversification Opportunities for JERICHO OIL and Dow Jones
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between JERICHO and Dow is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding JERICHO 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 JERICHO OIL 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 JERICHO 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 JERICHO OIL i.e., JERICHO OIL and Dow Jones go up and down completely randomly.
Pair Corralation between JERICHO OIL and Dow Jones
Assuming the 90 days trading horizon JERICHO OIL is expected to generate 13.72 times more return on investment than Dow Jones. However, JERICHO OIL is 13.72 times more volatile than Dow Jones Industrial. It trades about 0.05 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.09 per unit of risk. If you would invest 9.45 in JERICHO OIL on November 28, 2024 and sell it today you would lose (0.20) from holding JERICHO OIL or give up 2.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.87% |
| Values | Daily Returns |
JERICHO OIL vs. Dow Jones Industrial
Performance |
| Timeline |
JERICHO OIL and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
JERICHO OIL
Pair trading matchups for JERICHO OIL
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with JERICHO OIL and Dow Jones
The main advantage of trading using opposite JERICHO OIL and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JERICHO OIL 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.| JERICHO OIL vs. PLAYMATES TOYS | JERICHO OIL vs. DETALION GAMES SA | JERICHO OIL vs. GAMING FAC SA | JERICHO OIL vs. Nucletron Electronic Aktiengesellschaft |
| Dow Jones vs. Gladstone Investment | Dow Jones vs. BW Offshore Limited | Dow Jones vs. Fidus Investment Corp | Dow Jones vs. Aperture Health |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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