Correlation Between Prestige Cars and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Prestige Cars 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 Prestige Cars and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prestige Cars International and Dow Jones Industrial, you can compare the effects of market volatilities on Prestige Cars 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 Prestige Cars with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prestige Cars and Dow Jones.
Diversification Opportunities for Prestige Cars and Dow Jones
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Prestige and Dow is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Prestige Cars International 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 Prestige Cars 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 Prestige Cars International 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 Prestige Cars i.e., Prestige Cars and Dow Jones go up and down completely randomly.
Pair Corralation between Prestige Cars and Dow Jones
Given the investment horizon of 90 days Prestige Cars is expected to generate 6.19 times less return on investment than Dow Jones. In addition to that, Prestige Cars is 11.62 times more volatile than Dow Jones Industrial. It trades about 0.0 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.09 per unit of volatility. If you would invest 3,363,061 in Dow Jones Industrial on August 28, 2024 and sell it today you would earn a total of 1,110,596 from holding Dow Jones Industrial or generate 33.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Prestige Cars International vs. Dow Jones Industrial
Performance |
| Timeline |
Prestige Cars and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Prestige Cars International
Pair trading matchups for Prestige Cars
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Prestige Cars and Dow Jones
The main advantage of trading using opposite Prestige Cars and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prestige Cars 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.| Prestige Cars vs. Group 1 Automotive | Prestige Cars vs. AutoNation | Prestige Cars vs. Sonic Automotive | Prestige Cars vs. Asbury Automotive Group |
| 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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