Correlation Between Libstar Holdings and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Libstar Holdings 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 Libstar Holdings and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Libstar Holdings and Dow Jones Industrial, you can compare the effects of market volatilities on Libstar Holdings 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 Libstar Holdings with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Libstar Holdings and Dow Jones.
Diversification Opportunities for Libstar Holdings and Dow Jones
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Libstar and Dow is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Libstar Holdings 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 Libstar Holdings 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 Libstar Holdings 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 Libstar Holdings i.e., Libstar Holdings and Dow Jones go up and down completely randomly.
Pair Corralation between Libstar Holdings and Dow Jones
Assuming the 90 days trading horizon Libstar Holdings is expected to generate 4.18 times more return on investment than Dow Jones. However, Libstar Holdings is 4.18 times more volatile than Dow Jones Industrial. It trades about 0.07 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 29,776 in Libstar Holdings on August 26, 2024 and sell it today you would earn a total of 14,224 from holding Libstar Holdings or generate 47.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.8% |
| Values | Daily Returns |
Libstar Holdings vs. Dow Jones Industrial
Performance |
| Timeline |
Libstar Holdings and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Libstar Holdings
Pair trading matchups for Libstar Holdings
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Libstar Holdings and Dow Jones
The main advantage of trading using opposite Libstar Holdings and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Libstar Holdings 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.| Libstar Holdings vs. RCL Foods | Libstar Holdings vs. Oceana | Libstar Holdings vs. Brimstone Investment | Libstar Holdings vs. Brimstone Investment |
| 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.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |