Correlation Between Blue Moon and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Blue Moon 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 Blue Moon and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blue Moon Zinc and Dow Jones Industrial, you can compare the effects of market volatilities on Blue Moon 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 Blue Moon with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Moon and Dow Jones.
Diversification Opportunities for Blue Moon and Dow Jones
Very weak diversification
The 3 months correlation between Blue and Dow is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Blue Moon Zinc 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 Blue Moon 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 Blue Moon Zinc 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 Blue Moon i.e., Blue Moon and Dow Jones go up and down completely randomly.
Pair Corralation between Blue Moon and Dow Jones
Assuming the 90 days trading horizon Blue Moon Zinc is expected to generate 21.41 times more return on investment than Dow Jones. However, Blue Moon is 21.41 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 0.08 per unit of risk. If you would invest 10.00 in Blue Moon Zinc on September 26, 2024 and sell it today you would earn a total of 26.00 from holding Blue Moon Zinc or generate 260.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Blue Moon Zinc vs. Dow Jones Industrial
Performance |
| Timeline |
Blue Moon and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Blue Moon Zinc
Pair trading matchups for Blue Moon
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Blue Moon and Dow Jones
The main advantage of trading using opposite Blue Moon and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blue Moon 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.| Blue Moon vs. Monarca Minerals | Blue Moon vs. Outcrop Gold Corp | Blue Moon vs. Grande Portage Resources | Blue Moon vs. Klondike Silver Corp |
| Dow Jones vs. Sabre Corpo | Dow Jones vs. Cannae Holdings | Dow Jones vs. Pekin Life Insurance | Dow Jones vs. Supercom |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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