Correlation Between Opus One and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Opus One 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 Opus One and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Opus One Resources and Dow Jones Industrial, you can compare the effects of market volatilities on Opus One 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 Opus One with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Opus One and Dow Jones.
Diversification Opportunities for Opus One and Dow Jones
Poor diversification
The 3 months correlation between Opus and Dow is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Opus One Resources 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 Opus One 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 Opus One Resources 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 Opus One i.e., Opus One and Dow Jones go up and down completely randomly.
Pair Corralation between Opus One and Dow Jones
Assuming the 90 days horizon Opus One Resources is expected to generate 21.82 times more return on investment than Dow Jones. However, Opus One is 21.82 times more volatile than Dow Jones Industrial. It trades about 0.1 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 2.00 in Opus One Resources on August 27, 2024 and sell it today you would earn a total of 3.00 from holding Opus One Resources or generate 150.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Opus One Resources vs. Dow Jones Industrial
Performance |
| Timeline |
Opus One and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Opus One Resources
Pair trading matchups for Opus One
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Opus One and Dow Jones
The main advantage of trading using opposite Opus One and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Opus One 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.| Opus One vs. Air Canada | Opus One vs. Brookfield Office Properties | Opus One vs. Economic Investment Trust | Opus One vs. Western Investment |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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