Correlation Between Learning Technologies and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Learning Technologies 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 Learning Technologies and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Learning Technologies Group and Dow Jones Industrial, you can compare the effects of market volatilities on Learning Technologies 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 Learning Technologies with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Learning Technologies and Dow Jones.
Diversification Opportunities for Learning Technologies and Dow Jones
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Learning and Dow is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Learning Technologies Group 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 Learning Technologies 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 Learning Technologies Group 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 Learning Technologies i.e., Learning Technologies and Dow Jones go up and down completely randomly.
Pair Corralation between Learning Technologies and Dow Jones
Assuming the 90 days trading horizon Learning Technologies Group is expected to generate 0.27 times more return on investment than Dow Jones. However, Learning Technologies Group is 3.68 times less risky than Dow Jones. It trades about -0.21 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.21 per unit of risk. If you would invest 9,840 in Learning Technologies Group on October 12, 2024 and sell it today you would lose (80.00) from holding Learning Technologies Group or give up 0.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Learning Technologies Group vs. Dow Jones Industrial
Performance |
| Timeline |
Learning Technologies and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Learning Technologies Group
Pair trading matchups for Learning Technologies
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Learning Technologies and Dow Jones
The main advantage of trading using opposite Learning Technologies and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Learning Technologies 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.| Learning Technologies vs. Spire Healthcare Group | Learning Technologies vs. Universal Health Services | Learning Technologies vs. Worldwide Healthcare Trust | Learning Technologies vs. Optima Health plc |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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