Correlation Between Advanced Health and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Advanced Health 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 Advanced Health and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Health Intelligence and Dow Jones Industrial, you can compare the effects of market volatilities on Advanced Health 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 Advanced Health with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Health and Dow Jones.
Diversification Opportunities for Advanced Health and Dow Jones
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Advanced and Dow is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Health Intelligence 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 Advanced Health 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 Advanced Health Intelligence 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 Advanced Health i.e., Advanced Health and Dow Jones go up and down completely randomly.
Pair Corralation between Advanced Health and Dow Jones
Assuming the 90 days horizon Advanced Health Intelligence is expected to generate 147.34 times more return on investment than Dow Jones. However, Advanced Health is 147.34 times more volatile than Dow Jones Industrial. It trades about 0.1 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.1 per unit of risk. If you would invest 3.10 in Advanced Health Intelligence on August 26, 2024 and sell it today you would lose (2.70) from holding Advanced Health Intelligence or give up 87.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Health Intelligence vs. Dow Jones Industrial
Performance |
| Timeline |
Advanced Health and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Advanced Health Intelligence
Pair trading matchups for Advanced Health
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Advanced Health and Dow Jones
The main advantage of trading using opposite Advanced Health and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Health 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.| Advanced Health vs. Legacy Education | Advanced Health vs. NVIDIA | Advanced Health vs. Apple Inc | Advanced Health vs. Microsoft |
| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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