Correlation Between National Research and Dow Jones
Can any of the company-specific risk be diversified away by investing in both National Research 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 National Research and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Research Corp and Dow Jones Industrial, you can compare the effects of market volatilities on National Research 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 National Research with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Research and Dow Jones.
Diversification Opportunities for National Research and Dow Jones
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between National and Dow is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding National Research Corp 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 National Research 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 National Research Corp 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 National Research i.e., National Research and Dow Jones go up and down completely randomly.
Pair Corralation between National Research and Dow Jones
Considering the 90-day investment horizon National Research Corp is expected to generate 2.49 times more return on investment than Dow Jones. However, National Research is 2.49 times more volatile than Dow Jones Industrial. It trades about 0.07 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.11 per unit of risk. If you would invest 1,706 in National Research Corp on October 21, 2024 and sell it today you would earn a total of 35.00 from holding National Research Corp or generate 2.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
National Research Corp vs. Dow Jones Industrial
Performance |
| Timeline |
National Research and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
National Research Corp
Pair trading matchups for National Research
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with National Research and Dow Jones
The main advantage of trading using opposite National Research and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Research 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.| National Research vs. Omega Flex | National Research vs. NI Holdings | National Research vs. PC Connection | National Research vs. Northrim BanCorp |
| Dow Jones vs. SkyWest | Dow Jones vs. Air Transport Services | Dow Jones vs. LATAM Airlines Group | Dow Jones vs. Emerson Radio |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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