Correlation Between Magna Terra and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Magna Terra 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 Magna Terra and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magna Terra Minerals and Dow Jones Industrial, you can compare the effects of market volatilities on Magna Terra 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 Magna Terra with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magna Terra and Dow Jones.
Diversification Opportunities for Magna Terra and Dow Jones
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Magna and Dow is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Magna Terra Minerals 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 Magna Terra 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 Magna Terra Minerals 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 Magna Terra i.e., Magna Terra and Dow Jones go up and down completely randomly.
Pair Corralation between Magna Terra and Dow Jones
Assuming the 90 days horizon Magna Terra Minerals is expected to generate 26.9 times more return on investment than Dow Jones. However, Magna Terra is 26.9 times more volatile than Dow Jones Industrial. It trades about 0.12 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.27 per unit of risk. If you would invest 2.00 in Magna Terra Minerals on August 30, 2024 and sell it today you would earn a total of 0.00 from holding Magna Terra Minerals or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magna Terra Minerals vs. Dow Jones Industrial
Performance |
| Timeline |
Magna Terra and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Magna Terra Minerals
Pair trading matchups for Magna Terra
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Magna Terra and Dow Jones
The main advantage of trading using opposite Magna Terra and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magna Terra 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.| Magna Terra vs. First Majestic Silver | Magna Terra vs. Ivanhoe Energy | Magna Terra vs. Orezone Gold Corp | Magna Terra vs. Faraday Copper Corp |
| 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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