Correlation Between Light SA and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Light SA 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 Light SA and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Light SA and Dow Jones Industrial, you can compare the effects of market volatilities on Light SA 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 Light SA with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Light SA and Dow Jones.
Diversification Opportunities for Light SA and Dow Jones
Pay attention - limited upside
The 3 months correlation between Light and Dow is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Light SA 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 Light SA 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 Light SA 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 Light SA i.e., Light SA and Dow Jones go up and down completely randomly.
Pair Corralation between Light SA and Dow Jones
Assuming the 90 days trading horizon Light SA is expected to generate 6.15 times more return on investment than Dow Jones. However, Light SA is 6.15 times more volatile than Dow Jones Industrial. It trades about 0.02 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of risk. If you would invest 487.00 in Light SA on September 2, 2024 and sell it today you would lose (53.00) from holding Light SA or give up 10.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.0% |
| Values | Daily Returns |
Light SA vs. Dow Jones Industrial
Performance |
| Timeline |
Light SA and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Light SA
Pair trading matchups for Light SA
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Light SA and Dow Jones
The main advantage of trading using opposite Light SA and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Light SA 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.| Light SA vs. CPFL Energia SA | Light SA vs. Companhia Energtica de | Light SA vs. Centrais Eltricas Brasileiras | Light SA vs. Companhia de Saneamento |
| Dow Jones vs. Dream Finders Homes | Dow Jones vs. GEN Restaurant Group, | Dow Jones vs. National Beverage Corp | Dow Jones vs. BJs Restaurants |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |