Correlation Between Signature Bank and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Signature Bank 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 Signature Bank and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Signature Bank and Dow Jones Industrial, you can compare the effects of market volatilities on Signature Bank 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 Signature Bank with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Signature Bank and Dow Jones.
Diversification Opportunities for Signature Bank and Dow Jones
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Signature and Dow is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Signature Bank 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 Signature Bank 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 Signature Bank 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 Signature Bank i.e., Signature Bank and Dow Jones go up and down completely randomly.
Pair Corralation between Signature Bank and Dow Jones
Assuming the 90 days horizon Signature Bank is expected to generate 40.68 times more return on investment than Dow Jones. However, Signature Bank is 40.68 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 0.08 per unit of risk. If you would invest 1,605 in Signature Bank on September 3, 2024 and sell it today you would lose (1,603) from holding Signature Bank or give up 99.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 30.51% |
| Values | Daily Returns |
Signature Bank vs. Dow Jones Industrial
Performance |
| Timeline |
Signature Bank and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Signature Bank
Pair trading matchups for Signature Bank
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Signature Bank and Dow Jones
The main advantage of trading using opposite Signature Bank and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Signature Bank 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.| Signature Bank vs. Ryanair Holdings PLC | Signature Bank vs. Vita Coco | Signature Bank vs. Delta Air Lines | Signature Bank vs. Fomento Economico Mexicano |
| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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