Correlation Between Lucas GC and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Lucas GC 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 Lucas GC and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lucas GC Limited and Dow Jones Industrial, you can compare the effects of market volatilities on Lucas GC 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 Lucas GC with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lucas GC and Dow Jones.
Diversification Opportunities for Lucas GC and Dow Jones
Modest diversification
The 3 months correlation between Lucas and Dow is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Lucas GC Limited 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 Lucas GC 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 Lucas GC Limited 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 Lucas GC i.e., Lucas GC and Dow Jones go up and down completely randomly.
Pair Corralation between Lucas GC and Dow Jones
Given the investment horizon of 90 days Lucas GC Limited is expected to under-perform the Dow Jones. In addition to that, Lucas GC is 11.48 times more volatile than Dow Jones Industrial. It trades about -0.06 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.09 per unit of volatility. If you would invest 3,312,959 in Dow Jones Industrial on November 9, 2024 and sell it today you would earn a total of 1,161,804 from holding Dow Jones Industrial or generate 35.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 47.17% |
| Values | Daily Returns |
Lucas GC Limited vs. Dow Jones Industrial
Performance |
| Timeline |
Lucas GC and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Lucas GC Limited
Pair trading matchups for Lucas GC
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Lucas GC and Dow Jones
The main advantage of trading using opposite Lucas GC and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lucas GC 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.| Lucas GC vs. Precision Optics, | Lucas GC vs. Borr Drilling | Lucas GC vs. Intuitive Surgical | Lucas GC vs. JBG SMITH Properties |
| Dow Jones vs. Douglas Emmett | Dow Jones vs. Todos Medical | Dow Jones vs. Eastern Co | Dow Jones vs. Merit Medical Systems |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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