Correlation Between Loma Negra and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Loma Negra 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 Loma Negra and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Loma Negra Compania and Dow Jones Industrial, you can compare the effects of market volatilities on Loma Negra 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 Loma Negra with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loma Negra and Dow Jones.
Diversification Opportunities for Loma Negra and Dow Jones
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Loma and Dow is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Loma Negra Compania 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 Loma Negra 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 Loma Negra Compania 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 Loma Negra i.e., Loma Negra and Dow Jones go up and down completely randomly.
Pair Corralation between Loma Negra and Dow Jones
Assuming the 90 days trading horizon Loma Negra Compania is expected to generate 3.69 times more return on investment than Dow Jones. However, Loma Negra is 3.69 times more volatile than Dow Jones Industrial. It trades about 0.17 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 185,500 in Loma Negra Compania on November 2, 2024 and sell it today you would earn a total of 109,500 from holding Loma Negra Compania or generate 59.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Loma Negra Compania vs. Dow Jones Industrial
Performance |
| Timeline |
Loma Negra and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Loma Negra Compania
Pair trading matchups for Loma Negra
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Loma Negra and Dow Jones
The main advantage of trading using opposite Loma Negra and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loma Negra 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.| Loma Negra vs. Agrometal SAI | Loma Negra vs. Transportadora de Gas | Loma Negra vs. Harmony Gold Mining | Loma Negra vs. United States Steel |
| Dow Jones vs. Boston Properties | Dow Jones vs. Suntory Beverage Food | Dow Jones vs. Envista Holdings Corp | Dow Jones vs. Fevertree Drinks Plc |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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