Correlation Between China Finance and Dow Jones
Can any of the company-specific risk be diversified away by investing in both China Finance 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 China Finance and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Finance Online and Dow Jones Industrial, you can compare the effects of market volatilities on China Finance 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 China Finance with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Finance and Dow Jones.
Diversification Opportunities for China Finance and Dow Jones
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between China and Dow is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China Finance Online 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 China Finance 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 China Finance Online 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 China Finance i.e., China Finance and Dow Jones go up and down completely randomly.
Pair Corralation between China Finance and Dow Jones
Assuming the 90 days horizon China Finance Online is expected to generate 91.7 times more return on investment than Dow Jones. However, China Finance is 91.7 times more volatile than Dow Jones Industrial. It trades about 0.06 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.12 per unit of risk. If you would invest 0.01 in China Finance Online on August 27, 2024 and sell it today you would earn a total of 0.00 from holding China Finance Online or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Finance Online vs. Dow Jones Industrial
Performance |
| Timeline |
China Finance and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
China Finance Online
Pair trading matchups for China Finance
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with China Finance and Dow Jones
The main advantage of trading using opposite China Finance and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Finance 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.| China Finance vs. Morgan Stanley | China Finance vs. Goldman Sachs Group | China Finance vs. Charles Schwab Corp | China Finance vs. Interactive Brokers Group |
| Dow Jones vs. MI Homes | Dow Jones vs. Franklin Street Properties | Dow Jones vs. Summit Hotel Properties | Dow Jones vs. Portillos |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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