Correlation Between Saratoga Investment and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Saratoga Investment 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 Saratoga Investment and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Saratoga Investment Corp and Dow Jones Industrial, you can compare the effects of market volatilities on Saratoga Investment 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 Saratoga Investment with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saratoga Investment and Dow Jones.
Diversification Opportunities for Saratoga Investment and Dow Jones
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Saratoga and Dow is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Saratoga Investment Corp 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 Saratoga Investment 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 Saratoga Investment Corp 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 Saratoga Investment i.e., Saratoga Investment and Dow Jones go up and down completely randomly.
Pair Corralation between Saratoga Investment and Dow Jones
Considering the 90-day investment horizon Saratoga Investment is expected to generate 1.79 times less return on investment than Dow Jones. But when comparing it to its historical volatility, Saratoga Investment Corp is 1.65 times less risky than Dow Jones. It trades about 0.1 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,356,181 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 1,116,025 from holding Dow Jones Industrial or generate 33.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Saratoga Investment Corp vs. Dow Jones Industrial
Performance |
| Timeline |
Saratoga Investment and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Saratoga Investment Corp
Pair trading matchups for Saratoga Investment
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Saratoga Investment and Dow Jones
The main advantage of trading using opposite Saratoga Investment and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saratoga Investment 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.| Saratoga Investment vs. ATS Corporation | Saratoga Investment vs. Deswell Industries | Saratoga Investment vs. Chunghwa Telecom Co | Saratoga Investment vs. Highway Holdings Limited |
| 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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