Correlation Between PetroShale and Dow Jones
Can any of the company-specific risk be diversified away by investing in both PetroShale 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 PetroShale and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PetroShale and Dow Jones Industrial, you can compare the effects of market volatilities on PetroShale 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 PetroShale with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of PetroShale and Dow Jones.
Diversification Opportunities for PetroShale and Dow Jones
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between PetroShale and Dow is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding PetroShale 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 PetroShale 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 PetroShale 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 PetroShale i.e., PetroShale and Dow Jones go up and down completely randomly.
Pair Corralation between PetroShale and Dow Jones
Assuming the 90 days horizon PetroShale is expected to under-perform the Dow Jones. In addition to that, PetroShale is 4.43 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 0.12 per unit of volatility. If you would invest 3,383,361 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 1,107,704 from holding Dow Jones Industrial or generate 32.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
PetroShale vs. Dow Jones Industrial
Performance |
| Timeline |
PetroShale and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
PetroShale
Pair trading matchups for PetroShale
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with PetroShale and Dow Jones
The main advantage of trading using opposite PetroShale and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PetroShale 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.| PetroShale vs. Petroleo Brasileiro Petrobras | PetroShale vs. Equinor ASA ADR | PetroShale vs. Eni SpA ADR | PetroShale vs. YPF Sociedad Anonima |
| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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