Correlation Between Rock Tech and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Rock Tech 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 Rock Tech and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rock Tech Lithium and Dow Jones Industrial, you can compare the effects of market volatilities on Rock Tech 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 Rock Tech with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rock Tech and Dow Jones.
Diversification Opportunities for Rock Tech and Dow Jones
Good diversification
The 3 months correlation between Rock and Dow is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Rock Tech Lithium 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 Rock Tech 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 Rock Tech Lithium 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 Rock Tech i.e., Rock Tech and Dow Jones go up and down completely randomly.
Pair Corralation between Rock Tech and Dow Jones
Assuming the 90 days horizon Rock Tech Lithium is expected to under-perform the Dow Jones. In addition to that, Rock Tech is 5.61 times more volatile than Dow Jones Industrial. It trades about -0.03 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 3,378,148 in Dow Jones Industrial on August 29, 2024 and sell it today you would earn a total of 1,107,883 from holding Dow Jones Industrial or generate 32.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Rock Tech Lithium vs. Dow Jones Industrial
Performance |
| Timeline |
Rock Tech and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Rock Tech Lithium
Pair trading matchups for Rock Tech
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Rock Tech and Dow Jones
The main advantage of trading using opposite Rock Tech and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rock Tech 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.| Rock Tech vs. First Majestic Silver | Rock Tech vs. Ivanhoe Energy | Rock Tech vs. Orezone Gold Corp | Rock Tech vs. Faraday Copper Corp |
| 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |