Correlation Between LTC Properties and Dow Jones
Can any of the company-specific risk be diversified away by investing in both LTC Properties 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 LTC Properties and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LTC Properties and Dow Jones Industrial, you can compare the effects of market volatilities on LTC Properties 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 LTC Properties with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of LTC Properties and Dow Jones.
Diversification Opportunities for LTC Properties and Dow Jones
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LTC and Dow is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding LTC Properties 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 LTC Properties 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 LTC Properties 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 LTC Properties i.e., LTC Properties and Dow Jones go up and down completely randomly.
Pair Corralation between LTC Properties and Dow Jones
Assuming the 90 days horizon LTC Properties is expected to generate 1.02 times less return on investment than Dow Jones. In addition to that, LTC Properties is 1.45 times more volatile than Dow Jones Industrial. It trades about 0.19 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 4,223,305 in Dow Jones Industrial on August 30, 2024 and sell it today you would earn a total of 248,901 from holding Dow Jones Industrial or generate 5.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LTC Properties vs. Dow Jones Industrial
Performance |
| Timeline |
LTC Properties and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
LTC Properties
Pair trading matchups for LTC Properties
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with LTC Properties and Dow Jones
The main advantage of trading using opposite LTC Properties and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LTC Properties 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.| LTC Properties vs. MAGIC SOFTWARE ENTR | LTC Properties vs. Take Two Interactive Software | LTC Properties vs. Daito Trust Construction | LTC Properties vs. Granite Construction |
| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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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