Correlation Between Themes Lithium and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Themes Lithium 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 Themes Lithium and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Themes Lithium Battery and Dow Jones Industrial, you can compare the effects of market volatilities on Themes Lithium 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 Themes Lithium with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Themes Lithium and Dow Jones.
Diversification Opportunities for Themes Lithium and Dow Jones
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Themes and Dow is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Themes Lithium Battery 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 Themes Lithium 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 Themes Lithium Battery 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 Themes Lithium i.e., Themes Lithium and Dow Jones go up and down completely randomly.
Pair Corralation between Themes Lithium and Dow Jones
Given the investment horizon of 90 days Themes Lithium Battery is expected to under-perform the Dow Jones. In addition to that, Themes Lithium is 2.21 times more volatile than Dow Jones Industrial. It trades about -0.14 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.27 per unit of volatility. If you would invest 4,238,757 in Dow Jones Industrial on August 29, 2024 and sell it today you would earn a total of 247,274 from holding Dow Jones Industrial or generate 5.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Themes Lithium Battery vs. Dow Jones Industrial
Performance |
| Timeline |
Themes Lithium and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Themes Lithium Battery
Pair trading matchups for Themes Lithium
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Themes Lithium and Dow Jones
The main advantage of trading using opposite Themes Lithium and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Themes Lithium 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.| Themes Lithium vs. First Trust Exchange Traded | Themes Lithium vs. Ultimus Managers Trust | Themes Lithium vs. Horizon Kinetics Medical | Themes Lithium vs. Harbor Health Care |
| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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