Correlation Between PM Capital and Dow Jones
Can any of the company-specific risk be diversified away by investing in both PM Capital 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 PM Capital and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PM Capital Global and Dow Jones Industrial, you can compare the effects of market volatilities on PM Capital 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 PM Capital with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of PM Capital and Dow Jones.
Diversification Opportunities for PM Capital and Dow Jones
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PGF and Dow is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding PM Capital Global 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 PM Capital 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 PM Capital Global 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 PM Capital i.e., PM Capital and Dow Jones go up and down completely randomly.
Pair Corralation between PM Capital and Dow Jones
Assuming the 90 days trading horizon PM Capital Global is expected to generate 1.73 times more return on investment than Dow Jones. However, PM Capital is 1.73 times more volatile than Dow Jones Industrial. It trades about 0.08 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 181.00 in PM Capital Global on August 25, 2024 and sell it today you would earn a total of 44.00 from holding PM Capital Global or generate 24.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.13% |
| Values | Daily Returns |
PM Capital Global vs. Dow Jones Industrial
Performance |
| Timeline |
PM Capital and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
PM Capital Global
Pair trading matchups for PM Capital
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with PM Capital and Dow Jones
The main advantage of trading using opposite PM Capital and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PM Capital 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.| PM Capital vs. National Australia Bank | PM Capital vs. National Australia Bank | PM Capital vs. Westpac Banking | PM Capital vs. National Australia Bank |
| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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