Correlation Between Group Ten and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Group Ten 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 Group Ten and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Group Ten Metals and Dow Jones Industrial, you can compare the effects of market volatilities on Group Ten 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 Group Ten with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Group Ten and Dow Jones.
Diversification Opportunities for Group Ten and Dow Jones
Very weak diversification
The 3 months correlation between Group and Dow is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Group Ten Metals 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 Group Ten 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 Group Ten Metals 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 Group Ten i.e., Group Ten and Dow Jones go up and down completely randomly.
Pair Corralation between Group Ten and Dow Jones
Assuming the 90 days horizon Group Ten Metals is expected to generate 9.09 times more return on investment than Dow Jones. However, Group Ten is 9.09 times more volatile than Dow Jones Industrial. It trades about 0.02 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.11 per unit of risk. If you would invest 14.00 in Group Ten Metals on August 29, 2024 and sell it today you would lose (3.00) from holding Group Ten Metals or give up 21.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Group Ten Metals vs. Dow Jones Industrial
Performance |
| Timeline |
Group Ten and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Group Ten Metals
Pair trading matchups for Group Ten
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Group Ten and Dow Jones
The main advantage of trading using opposite Group Ten and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Group Ten 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.| Group Ten vs. Ascendant Resources | Group Ten vs. Atico Mining | Group Ten vs. Prime Mining Corp | Group Ten vs. Wallbridge Mining |
| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |