Correlation Between Premium Catering and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Premium Catering 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 Premium Catering and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Premium Catering Limited and Dow Jones Industrial, you can compare the effects of market volatilities on Premium Catering 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 Premium Catering with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premium Catering and Dow Jones.
Diversification Opportunities for Premium Catering and Dow Jones
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Premium and Dow is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Premium Catering 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 Premium Catering 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 Premium Catering 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 Premium Catering i.e., Premium Catering and Dow Jones go up and down completely randomly.
Pair Corralation between Premium Catering and Dow Jones
Allowing for the 90-day total investment horizon Premium Catering Limited is expected to under-perform the Dow Jones. In addition to that, Premium Catering is 15.36 times more volatile than Dow Jones Industrial. It trades about -0.08 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of volatility. If you would invest 3,879,738 in Dow Jones Industrial on November 8, 2024 and sell it today you would earn a total of 607,590 from holding Dow Jones Industrial or generate 15.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 36.69% |
| Values | Daily Returns |
Premium Catering Limited vs. Dow Jones Industrial
Performance |
| Timeline |
Premium Catering and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Premium Catering Limited
Pair trading matchups for Premium Catering
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Premium Catering and Dow Jones
The main advantage of trading using opposite Premium Catering and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premium Catering 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.| Premium Catering vs. BrightView Holdings | Premium Catering vs. Target Hospitality Corp | Premium Catering vs. ABM Industries Incorporated | Premium Catering vs. AZZ Incorporated |
| Dow Jones vs. National Vision Holdings | Dow Jones vs. Grocery Outlet Holding | Dow Jones vs. Asbury Automotive Group | Dow Jones vs. Hanover Foods |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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