Correlation Between Living Cell and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Living Cell 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 Living Cell and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Living Cell Technologies and Dow Jones Industrial, you can compare the effects of market volatilities on Living Cell 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 Living Cell with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Living Cell and Dow Jones.
Diversification Opportunities for Living Cell and Dow Jones
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Living and Dow is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Living Cell Technologies 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 Living Cell 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 Living Cell Technologies 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 Living Cell i.e., Living Cell and Dow Jones go up and down completely randomly.
Pair Corralation between Living Cell and Dow Jones
Assuming the 90 days horizon Living Cell Technologies is expected to generate 117.22 times more return on investment than Dow Jones. However, Living Cell is 117.22 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 0.16 per unit of risk. If you would invest 0.69 in Living Cell Technologies on September 3, 2024 and sell it today you would lose (0.26) from holding Living Cell Technologies or give up 37.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Living Cell Technologies vs. Dow Jones Industrial
Performance |
| Timeline |
Living Cell and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Living Cell Technologies
Pair trading matchups for Living Cell
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Living Cell and Dow Jones
The main advantage of trading using opposite Living Cell and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Living Cell 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.| Living Cell vs. Microbot Medical | Living Cell vs. Park Hotels Resorts | Living Cell vs. The Cheesecake Factory | Living Cell vs. Cardinal Health |
| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
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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