Correlation Between Paragon Technologies and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Paragon Technologies 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 Paragon Technologies and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Paragon Technologies and Dow Jones Industrial, you can compare the effects of market volatilities on Paragon Technologies 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 Paragon Technologies with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paragon Technologies and Dow Jones.
Diversification Opportunities for Paragon Technologies and Dow Jones
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Paragon and Dow is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Paragon Technologies 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 Paragon Technologies 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 Paragon Technologies 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 Paragon Technologies i.e., Paragon Technologies and Dow Jones go up and down completely randomly.
Pair Corralation between Paragon Technologies and Dow Jones
Given the investment horizon of 90 days Paragon Technologies is expected to generate 4.8 times more return on investment than Dow Jones. However, Paragon Technologies is 4.8 times more volatile than Dow Jones Industrial. It trades about 0.24 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.27 per unit of risk. If you would invest 600.00 in Paragon Technologies on August 29, 2024 and sell it today you would earn a total of 150.00 from holding Paragon Technologies or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Paragon Technologies vs. Dow Jones Industrial
Performance |
| Timeline |
Paragon Technologies and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Paragon Technologies
Pair trading matchups for Paragon Technologies
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Paragon Technologies and Dow Jones
The main advantage of trading using opposite Paragon Technologies and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paragon Technologies 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.| Paragon Technologies vs. Boxlight Corp Class | Paragon Technologies vs. Siyata Mobile | Paragon Technologies vs. ClearOne | Paragon Technologies vs. HUMANA INC |
| 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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