Correlation Between ZIMPLATS HLDGS and Dow Jones
Can any of the company-specific risk be diversified away by investing in both ZIMPLATS HLDGS 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 ZIMPLATS HLDGS and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ZIMPLATS HLDGS and Dow Jones Industrial, you can compare the effects of market volatilities on ZIMPLATS HLDGS 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 ZIMPLATS HLDGS with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZIMPLATS HLDGS and Dow Jones.
Diversification Opportunities for ZIMPLATS HLDGS and Dow Jones
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between ZIMPLATS and Dow is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding ZIMPLATS HLDGS 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 ZIMPLATS HLDGS 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 ZIMPLATS HLDGS 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 ZIMPLATS HLDGS i.e., ZIMPLATS HLDGS and Dow Jones go up and down completely randomly.
Pair Corralation between ZIMPLATS HLDGS and Dow Jones
Assuming the 90 days trading horizon ZIMPLATS HLDGS is expected to under-perform the Dow Jones. In addition to that, ZIMPLATS HLDGS is 3.12 times more volatile than Dow Jones Industrial. It trades about -0.11 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.12 per unit of volatility. If you would invest 4,093,693 in Dow Jones Industrial on November 2, 2024 and sell it today you would earn a total of 394,520 from holding Dow Jones Industrial or generate 9.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ZIMPLATS HLDGS vs. Dow Jones Industrial
Performance |
| Timeline |
ZIMPLATS HLDGS and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
ZIMPLATS HLDGS
Pair trading matchups for ZIMPLATS HLDGS
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with ZIMPLATS HLDGS and Dow Jones
The main advantage of trading using opposite ZIMPLATS HLDGS and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZIMPLATS HLDGS 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.| ZIMPLATS HLDGS vs. CONTAGIOUS GAMING INC | ZIMPLATS HLDGS vs. Penn National Gaming | ZIMPLATS HLDGS vs. BAKED GAMES SA | ZIMPLATS HLDGS vs. Grand Canyon Education |
| Dow Jones vs. Boston Properties | Dow Jones vs. Suntory Beverage Food | Dow Jones vs. Envista Holdings Corp | Dow Jones vs. Fevertree Drinks Plc |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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