Correlation Between Option Care and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Option Care 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 Option Care and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Option Care Health and Dow Jones Industrial, you can compare the effects of market volatilities on Option Care 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 Option Care with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Option Care and Dow Jones.
Diversification Opportunities for Option Care and Dow Jones
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Option and Dow is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Option Care Health 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 Option Care 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 Option Care Health 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 Option Care i.e., Option Care and Dow Jones go up and down completely randomly.
Pair Corralation between Option Care and Dow Jones
Assuming the 90 days trading horizon Option Care Health is expected to under-perform the Dow Jones. In addition to that, Option Care is 5.56 times more volatile than Dow Jones Industrial. It trades about -0.14 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 Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Option Care Health vs. Dow Jones Industrial
Performance |
| Timeline |
Option Care and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Option Care Health
Pair trading matchups for Option Care
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Option Care and Dow Jones
The main advantage of trading using opposite Option Care and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Option Care 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.| Option Care vs. CarsalesCom | Option Care vs. PACIFIC ONLINE | Option Care vs. Silicon Motion Technology | Option Care vs. NISSAN CHEMICAL IND |
| 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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