Correlation Between Next Hydrogen and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Next Hydrogen 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 Next Hydrogen and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Next Hydrogen Solutions and Dow Jones Industrial, you can compare the effects of market volatilities on Next Hydrogen 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 Next Hydrogen with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Next Hydrogen and Dow Jones.
Diversification Opportunities for Next Hydrogen and Dow Jones
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Next and Dow is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Next Hydrogen Solutions 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 Next Hydrogen 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 Next Hydrogen Solutions 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 Next Hydrogen i.e., Next Hydrogen and Dow Jones go up and down completely randomly.
Pair Corralation between Next Hydrogen and Dow Jones
Assuming the 90 days horizon Next Hydrogen Solutions is expected to generate 24.96 times more return on investment than Dow Jones. However, Next Hydrogen is 24.96 times more volatile than Dow Jones Industrial. It trades about 0.16 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.16 per unit of risk. If you would invest 45.00 in Next Hydrogen Solutions on December 1, 2024 and sell it today you would earn a total of 15.00 from holding Next Hydrogen Solutions or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Next Hydrogen Solutions vs. Dow Jones Industrial
Performance |
| Timeline |
Next Hydrogen and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Next Hydrogen Solutions
Pair trading matchups for Next Hydrogen
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Next Hydrogen and Dow Jones
The main advantage of trading using opposite Next Hydrogen and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Next Hydrogen 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.| Next Hydrogen vs. Weir Group PLC | Next Hydrogen vs. Greenshift Corp | Next Hydrogen vs. Quality Industrial Corp | Next Hydrogen vs. ITM Power Plc |
| Dow Jones vs. Cannae Holdings | Dow Jones vs. Fidus Investment Corp | Dow Jones vs. SEI Investments | Dow Jones vs. Cracker Barrel Old |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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