Correlation Between Patterson Companies and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Patterson Companies 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 Patterson Companies and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Patterson Companies and Dow Jones Industrial, you can compare the effects of market volatilities on Patterson Companies 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 Patterson Companies with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Patterson Companies and Dow Jones.
Diversification Opportunities for Patterson Companies and Dow Jones
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Patterson and Dow is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Patterson Companies 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 Patterson Companies 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 Patterson Companies 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 Patterson Companies i.e., Patterson Companies and Dow Jones go up and down completely randomly.
Pair Corralation between Patterson Companies and Dow Jones
Assuming the 90 days horizon Patterson Companies is expected to generate 1.2 times less return on investment than Dow Jones. In addition to that, Patterson Companies is 2.89 times more volatile than Dow Jones Industrial. It trades about 0.11 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.38 per unit of volatility. If you would invest 4,179,460 in Dow Jones Industrial on September 3, 2024 and sell it today you would earn a total of 311,605 from holding Dow Jones Industrial or generate 7.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Patterson Companies vs. Dow Jones Industrial
Performance |
| Timeline |
Patterson Companies and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Patterson Companies
Pair trading matchups for Patterson Companies
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Patterson Companies and Dow Jones
The main advantage of trading using opposite Patterson Companies and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Patterson Companies 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.| Patterson Companies vs. AmerisourceBergen | Patterson Companies vs. Superior Plus Corp | Patterson Companies vs. NMI Holdings | Patterson Companies vs. Origin Agritech |
| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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