Correlation Between Patria Investments and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Patria Investments 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 Patria Investments and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Patria Investments Limited and Dow Jones Industrial, you can compare the effects of market volatilities on Patria Investments 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 Patria Investments with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Patria Investments and Dow Jones.
Diversification Opportunities for Patria Investments and Dow Jones
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Patria and Dow is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Patria Investments Limited 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 Patria Investments 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 Patria Investments Limited 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 Patria Investments i.e., Patria Investments and Dow Jones go up and down completely randomly.
Pair Corralation between Patria Investments and Dow Jones
Assuming the 90 days trading horizon Patria Investments Limited is expected to under-perform the Dow Jones. In addition to that, Patria Investments is 1.62 times more volatile than Dow Jones Industrial. It trades about -0.26 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.26 per unit of volatility. If you would invest 4,382,806 in Dow Jones Industrial on October 14, 2024 and sell it today you would lose (188,961) from holding Dow Jones Industrial or give up 4.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.0% |
| Values | Daily Returns |
Patria Investments Limited vs. Dow Jones Industrial
Performance |
| Timeline |
Patria Investments and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Patria Investments Limited
Pair trading matchups for Patria Investments
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Patria Investments and Dow Jones
The main advantage of trading using opposite Patria Investments and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Patria Investments 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.| Patria Investments vs. Fair Isaac | Patria Investments vs. United Airlines Holdings | Patria Investments vs. Westinghouse Air Brake | Patria Investments vs. SK Telecom Co, |
| Dow Jones vs. Chipotle Mexican Grill | Dow Jones vs. Teleflex Incorporated | Dow Jones vs. Dine Brands Global | Dow Jones vs. Alvotech |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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