Correlation Between North Bay and Dow Jones
Can any of the company-specific risk be diversified away by investing in both North Bay 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 North Bay and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North Bay Resources and Dow Jones Industrial, you can compare the effects of market volatilities on North Bay 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 North Bay with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of North Bay and Dow Jones.
Diversification Opportunities for North Bay and Dow Jones
Significant diversification
The 3 months correlation between North and Dow is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding North Bay Resources 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 North Bay 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 North Bay Resources 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 North Bay i.e., North Bay and Dow Jones go up and down completely randomly.
Pair Corralation between North Bay and Dow Jones
Given the investment horizon of 90 days North Bay Resources is expected to generate 38.29 times more return on investment than Dow Jones. However, North Bay is 38.29 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 0.08 per unit of risk. If you would invest 0.03 in North Bay Resources on November 2, 2024 and sell it today you would earn a total of 0.08 from holding North Bay Resources or generate 266.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
North Bay Resources vs. Dow Jones Industrial
Performance |
| Timeline |
North Bay and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
North Bay Resources
Pair trading matchups for North Bay
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with North Bay and Dow Jones
The main advantage of trading using opposite North Bay and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North Bay 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.| North Bay vs. Diamond Fields Resources | North Bay vs. EnviroGold Global Limited | North Bay vs. Gemfields Group Limited | North Bay vs. Pacific Ridge Exploration |
| Dow Jones vs. Cincinnati Financial | Dow Jones vs. Kellanova | Dow Jones vs. Acme United | Dow Jones vs. Procter Gamble |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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