Correlation Between Rush Factory and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Rush Factory 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 Rush Factory and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rush Factory Oyj and Dow Jones Industrial, you can compare the effects of market volatilities on Rush Factory 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 Rush Factory with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rush Factory and Dow Jones.
Diversification Opportunities for Rush Factory and Dow Jones
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Rush and Dow is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Rush Factory Oyj 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 Rush Factory 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 Rush Factory Oyj 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 Rush Factory i.e., Rush Factory and Dow Jones go up and down completely randomly.
Pair Corralation between Rush Factory and Dow Jones
Assuming the 90 days trading horizon Rush Factory Oyj is expected to generate 13.85 times more return on investment than Dow Jones. However, Rush Factory is 13.85 times more volatile than Dow Jones Industrial. It trades about 0.33 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.37 per unit of risk. If you would invest 30.00 in Rush Factory Oyj on September 1, 2024 and sell it today you would earn a total of 36.00 from holding Rush Factory Oyj or generate 120.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Rush Factory Oyj vs. Dow Jones Industrial
Performance |
| Timeline |
Rush Factory and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Rush Factory Oyj
Pair trading matchups for Rush Factory
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Rush Factory and Dow Jones
The main advantage of trading using opposite Rush Factory and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rush Factory 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.| Rush Factory vs. Nexstim Oyj | Rush Factory vs. Titanium Oyj | Rush Factory vs. Vincit Group Oyj | Rush Factory vs. Solteq PLC |
| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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