Correlation Between Select Medical and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Select Medical 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 Select Medical and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Select Medical Holdings and Dow Jones Industrial, you can compare the effects of market volatilities on Select Medical 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 Select Medical with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Medical and Dow Jones.
Diversification Opportunities for Select Medical and Dow Jones
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Select and Dow is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Select Medical Holdings 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 Select Medical 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 Select Medical Holdings 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 Select Medical i.e., Select Medical and Dow Jones go up and down completely randomly.
Pair Corralation between Select Medical and Dow Jones
Assuming the 90 days horizon Select Medical is expected to generate 1.67 times less return on investment than Dow Jones. In addition to that, Select Medical is 2.91 times more volatile than Dow Jones Industrial. It trades about 0.07 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.33 per unit of volatility. If you would invest 4,239,227 in Dow Jones Industrial on November 3, 2024 and sell it today you would earn a total of 215,239 from holding Dow Jones Industrial or generate 5.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Select Medical Holdings vs. Dow Jones Industrial
Performance |
| Timeline |
Select Medical and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Select Medical Holdings
Pair trading matchups for Select Medical
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Select Medical and Dow Jones
The main advantage of trading using opposite Select Medical and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Medical 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.| Select Medical vs. British American Tobacco | Select Medical vs. Urban Outfitters | Select Medical vs. G III APPAREL GROUP | Select Medical vs. OPKO HEALTH |
| Dow Jones vs. Rambler Metals and | Dow Jones vs. Nicola Mining | Dow Jones vs. Old Dominion Freight | Dow Jones vs. United Guardian |
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.
Other Complementary Tools
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |