Correlation Between Next PLC and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Next PLC 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 PLC 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 PLC and Dow Jones Industrial, you can compare the effects of market volatilities on Next PLC 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 PLC with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Next PLC and Dow Jones.
Diversification Opportunities for Next PLC and Dow Jones
Very good diversification
The 3 months correlation between Next and Dow is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Next PLC 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 PLC 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 PLC 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 PLC i.e., Next PLC and Dow Jones go up and down completely randomly.
Pair Corralation between Next PLC and Dow Jones
Assuming the 90 days trading horizon Next PLC is expected to generate 1.98 times more return on investment than Dow Jones. However, Next PLC is 1.98 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 0.1 per unit of risk. If you would invest 799,238 in Next PLC on August 25, 2024 and sell it today you would earn a total of 177,162 from holding Next PLC or generate 22.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.13% |
| Values | Daily Returns |
Next PLC vs. Dow Jones Industrial
Performance |
| Timeline |
Next PLC and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Next PLC
Pair trading matchups for Next PLC
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Next PLC and Dow Jones
The main advantage of trading using opposite Next PLC and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Next PLC 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 PLC vs. Aeorema Communications Plc | Next PLC vs. Games Workshop Group | Next PLC vs. Gamma Communications PLC | Next PLC vs. Zoom Video Communications |
| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |