Correlation Between Owens Corning and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Owens Corning 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 Owens Corning and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Owens Corning and Dow Jones Industrial, you can compare the effects of market volatilities on Owens Corning 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 Owens Corning with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Owens Corning and Dow Jones.
Diversification Opportunities for Owens Corning and Dow Jones
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Owens and Dow is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Owens Corning 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 Owens Corning 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 Owens Corning 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 Owens Corning i.e., Owens Corning and Dow Jones go up and down completely randomly.
Pair Corralation between Owens Corning and Dow Jones
Allowing for the 90-day total investment horizon Owens Corning is expected to generate 1.69 times more return on investment than Dow Jones. However, Owens Corning is 1.69 times more volatile than Dow Jones Industrial. It trades about 0.35 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.29 per unit of risk. If you would invest 18,158 in Owens Corning on August 31, 2024 and sell it today you would earn a total of 2,352 from holding Owens Corning or generate 12.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Owens Corning vs. Dow Jones Industrial
Performance |
| Timeline |
Owens Corning and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Owens Corning
Pair trading matchups for Owens Corning
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Owens Corning and Dow Jones
The main advantage of trading using opposite Owens Corning and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Owens Corning 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.| Owens Corning vs. Trane Technologies plc | Owens Corning vs. Masco | Owens Corning vs. Quanex Building Products | Owens Corning vs. Jeld Wen Holding |
| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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