Correlation Between New Mountain and Dow Jones
Can any of the company-specific risk be diversified away by investing in both New Mountain 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 New Mountain and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Mountain Finance and Dow Jones Industrial, you can compare the effects of market volatilities on New Mountain 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 New Mountain with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Mountain and Dow Jones.
Diversification Opportunities for New Mountain and Dow Jones
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between New and Dow is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding New Mountain Finance 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 New Mountain 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 New Mountain Finance 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 New Mountain i.e., New Mountain and Dow Jones go up and down completely randomly.
Pair Corralation between New Mountain and Dow Jones
Given the investment horizon of 90 days New Mountain is expected to generate 201.14 times less return on investment than Dow Jones. In addition to that, New Mountain is 1.38 times more volatile than Dow Jones Industrial. It trades about 0.0 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.15 per unit of volatility. If you would invest 4,251,495 in Dow Jones Industrial on August 24, 2024 and sell it today you would earn a total of 135,540 from holding Dow Jones Industrial or generate 3.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Mountain Finance vs. Dow Jones Industrial
Performance |
| Timeline |
New Mountain and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
New Mountain Finance
Pair trading matchups for New Mountain
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with New Mountain and Dow Jones
The main advantage of trading using opposite New Mountain and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Mountain 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.| New Mountain vs. Invesco Advantage MIT | New Mountain vs. Invesco Municipal Trust | New Mountain vs. Invesco California Value | New Mountain vs. Victory Capital Holdings |
| Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. Titan Machinery | Dow Jones vs. Simon Property Group |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |