Correlation Between Douglas Dynamics and Dow Jones

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Douglas Dynamics 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 Douglas Dynamics and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Douglas Dynamics and Dow Jones Industrial, you can compare the effects of market volatilities on Douglas Dynamics 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 Douglas Dynamics with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Douglas Dynamics and Dow Jones.

Diversification Opportunities for Douglas Dynamics and Dow Jones

DouglasDowDiversified AwayDouglasDowDiversified Away100%
0.84
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Douglas and Dow is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Douglas Dynamics 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 Douglas Dynamics 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 Douglas Dynamics 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 Douglas Dynamics i.e., Douglas Dynamics and Dow Jones go up and down completely randomly.
    Optimize

Pair Corralation between Douglas Dynamics and Dow Jones

Given the investment horizon of 90 days Douglas Dynamics is expected to under-perform the Dow Jones. In addition to that, Douglas Dynamics is 3.11 times more volatile than Dow Jones Industrial. It trades about -0.02 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  3,285,646  in Dow Jones Industrial on November 26, 2024 and sell it today you would earn a total of  1,060,475  from holding Dow Jones Industrial or generate 32.28% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy99.8%
ValuesDaily Returns

Douglas Dynamics  vs.  Dow Jones Industrial

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -6-4-20246
JavaScript chart by amCharts 3.21.15PLOW DJI
       Timeline  

Douglas Dynamics and Dow Jones Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.32-3.24-2.15-1.070.01861.122.233.354.47 0.10.20.30.40.50.60.7
JavaScript chart by amCharts 3.21.15PLOW DJI
       Returns  

Pair Trading with Douglas Dynamics and Dow Jones

The main advantage of trading using opposite Douglas Dynamics and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Douglas Dynamics 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.
The idea behind Douglas Dynamics and Dow Jones Industrial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.

Other Complementary Tools

Funds Screener
Find actively-traded funds from around the world traded on over 30 global exchanges
Portfolio Center
All portfolio management and optimization tools to improve performance of your portfolios
FinTech Suite
Use AI to screen and filter profitable investment opportunities
Pair Correlation
Compare performance and examine fundamental relationship between any two equity instruments
Portfolio Comparator
Compare the composition, asset allocations and performance of any two portfolios in your account


 

Trending Assets

NULL
Nedbank Group Limited
0.00  0.00  0.00 
TIG
Tigere Real Estate
114.95  0.09  0.08 
ZBFH
ZB FINANCIAL HOLDINGS
451.00  -18.9  -4.02 
WILD
WILLDALE LIMITED
2.40  0.26  12.15 
RIOZ
RIO ZIM LIMITED
106.90  0.00  0.00 
SACL
STAR AFRICA PORATION
2.86  -0.14  -4.67 
CAFCA
CAFCA LIMITED
1,800  -25  -1.37 
DMCS
Datvest Modified Consumer
3.00  0.00  0.00 
EHZL
ECOCASH HOLDINGS ZIMBABWE
14.09  -1.4  -9.04