Correlation Between Laguna Resorts and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Laguna Resorts 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 Laguna Resorts and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Laguna Resorts Hotels and Dow Jones Industrial, you can compare the effects of market volatilities on Laguna Resorts 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 Laguna Resorts with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laguna Resorts and Dow Jones.
Diversification Opportunities for Laguna Resorts and Dow Jones
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Laguna and Dow is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Laguna Resorts Hotels 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 Laguna Resorts 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 Laguna Resorts Hotels 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 Laguna Resorts i.e., Laguna Resorts and Dow Jones go up and down completely randomly.
Pair Corralation between Laguna Resorts and Dow Jones
Assuming the 90 days trading horizon Laguna Resorts Hotels is expected to generate 119.18 times more return on investment than Dow Jones. However, Laguna Resorts is 119.18 times more volatile than Dow Jones Industrial. It trades about 0.08 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.15 per unit of risk. If you would invest 3,875 in Laguna Resorts Hotels on November 3, 2024 and sell it today you would earn a total of 75.00 from holding Laguna Resorts Hotels or generate 1.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.4% |
| Values | Daily Returns |
Laguna Resorts Hotels vs. Dow Jones Industrial
Performance |
| Timeline |
Laguna Resorts and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Laguna Resorts Hotels
Pair trading matchups for Laguna Resorts
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Laguna Resorts and Dow Jones
The main advantage of trading using opposite Laguna Resorts and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laguna Resorts 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.| Laguna Resorts vs. OHTL Public | Laguna Resorts vs. LPN Development Public | Laguna Resorts vs. The Erawan Group | Laguna Resorts vs. MBK Public |
| Dow Jones vs. Cincinnati Financial | Dow Jones vs. Kellanova | Dow Jones vs. Acme United | Dow Jones vs. Procter Gamble |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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