Correlation Between Miton UK and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Miton UK 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 Miton UK and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Miton UK MicroCap and Dow Jones Industrial, you can compare the effects of market volatilities on Miton UK 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 Miton UK with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Miton UK and Dow Jones.
Diversification Opportunities for Miton UK and Dow Jones
Excellent diversification
The 3 months correlation between Miton and Dow is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Miton UK MicroCap 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 Miton UK 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 Miton UK MicroCap 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 Miton UK i.e., Miton UK and Dow Jones go up and down completely randomly.
Pair Corralation between Miton UK and Dow Jones
Assuming the 90 days trading horizon Miton UK is expected to generate 2.25 times less return on investment than Dow Jones. But when comparing it to its historical volatility, Miton UK MicroCap is 1.81 times less risky than Dow Jones. It trades about 0.22 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.27 of returns per unit of risk over similar time horizon. 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 Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Miton UK MicroCap vs. Dow Jones Industrial
Performance |
| Timeline |
Miton UK and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Miton UK MicroCap
Pair trading matchups for Miton UK
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Miton UK and Dow Jones
The main advantage of trading using opposite Miton UK and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Miton UK 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.| Miton UK vs. Sabre Insurance Group | Miton UK vs. Vienna Insurance Group | Miton UK vs. Schroders Investment Trusts | Miton UK vs. Herald Investment Trust |
| Dow Jones vs. Skillful Craftsman Education | Dow Jones vs. Acco Brands | Dow Jones vs. Cracker Barrel Old | Dow Jones vs. Coursera |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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