Correlation Between REDFLEX HOLDINGS and Dow Jones
Can any of the company-specific risk be diversified away by investing in both REDFLEX HOLDINGS 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 REDFLEX HOLDINGS and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REDFLEX HOLDINGS LTD and Dow Jones Industrial, you can compare the effects of market volatilities on REDFLEX HOLDINGS 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 REDFLEX HOLDINGS with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of REDFLEX HOLDINGS and Dow Jones.
Diversification Opportunities for REDFLEX HOLDINGS and Dow Jones
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between REDFLEX and Dow is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding REDFLEX HOLDINGS LTD 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 REDFLEX HOLDINGS 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 REDFLEX HOLDINGS LTD 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 REDFLEX HOLDINGS i.e., REDFLEX HOLDINGS and Dow Jones go up and down completely randomly.
Pair Corralation between REDFLEX HOLDINGS and Dow Jones
Assuming the 90 days horizon REDFLEX HOLDINGS LTD is expected to generate 24.46 times more return on investment than Dow Jones. However, REDFLEX HOLDINGS is 24.46 times more volatile than Dow Jones Industrial. It trades about 0.09 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.26 per unit of risk. If you would invest 2.92 in REDFLEX HOLDINGS LTD on August 29, 2024 and sell it today you would lose (0.12) from holding REDFLEX HOLDINGS LTD or give up 4.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
REDFLEX HOLDINGS LTD vs. Dow Jones Industrial
Performance |
| Timeline |
REDFLEX HOLDINGS and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
REDFLEX HOLDINGS LTD
Pair trading matchups for REDFLEX HOLDINGS
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with REDFLEX HOLDINGS and Dow Jones
The main advantage of trading using opposite REDFLEX HOLDINGS and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REDFLEX HOLDINGS 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.| REDFLEX HOLDINGS vs. RBC Bearings Incorporated | REDFLEX HOLDINGS vs. Stevanato Group SpA | REDFLEX HOLDINGS vs. Merit Medical Systems | REDFLEX HOLDINGS vs. Repligen |
| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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