Correlation Between Oak Woods and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Oak Woods 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 Oak Woods and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oak Woods Acquisition and Dow Jones Industrial, you can compare the effects of market volatilities on Oak Woods 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 Oak Woods with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oak Woods and Dow Jones.
Diversification Opportunities for Oak Woods and Dow Jones
Weak diversification
The 3 months correlation between Oak and Dow is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Oak Woods Acquisition 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 Oak Woods 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 Oak Woods Acquisition 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 Oak Woods i.e., Oak Woods and Dow Jones go up and down completely randomly.
Pair Corralation between Oak Woods and Dow Jones
Assuming the 90 days horizon Oak Woods Acquisition is expected to generate 15.8 times more return on investment than Dow Jones. However, Oak Woods is 15.8 times more volatile than Dow Jones Industrial. It trades about 0.17 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.26 per unit of risk. If you would invest 2.60 in Oak Woods Acquisition on August 29, 2024 and sell it today you would earn a total of 0.90 from holding Oak Woods Acquisition or generate 34.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 78.26% |
| Values | Daily Returns |
Oak Woods Acquisition vs. Dow Jones Industrial
Performance |
| Timeline |
Oak Woods and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Oak Woods Acquisition
Pair trading matchups for Oak Woods
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Oak Woods and Dow Jones
The main advantage of trading using opposite Oak Woods and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oak Woods 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.| Oak Woods vs. Patria Latin American | Oak Woods vs. ABIVAX Socit Anonyme | Oak Woods vs. Pinnacle Sherman Multi Strategy | Oak Woods vs. Morningstar Unconstrained Allocation |
| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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