Correlation Between Seeing Machines and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Seeing Machines 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 Seeing Machines and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seeing Machines Limited and Dow Jones Industrial, you can compare the effects of market volatilities on Seeing Machines 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 Seeing Machines with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seeing Machines and Dow Jones.
Diversification Opportunities for Seeing Machines and Dow Jones
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Seeing and Dow is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Seeing Machines Limited 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 Seeing Machines 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 Seeing Machines Limited 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 Seeing Machines i.e., Seeing Machines and Dow Jones go up and down completely randomly.
Pair Corralation between Seeing Machines and Dow Jones
Assuming the 90 days trading horizon Seeing Machines Limited is expected to under-perform the Dow Jones. In addition to that, Seeing Machines is 4.8 times more volatile than Dow Jones Industrial. It trades about -0.17 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.16 per unit of volatility. If you would invest 4,233,015 in Dow Jones Industrial on August 30, 2024 and sell it today you would earn a total of 239,191 from holding Dow Jones Industrial or generate 5.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seeing Machines Limited vs. Dow Jones Industrial
Performance |
| Timeline |
Seeing Machines and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Seeing Machines Limited
Pair trading matchups for Seeing Machines
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Seeing Machines and Dow Jones
The main advantage of trading using opposite Seeing Machines and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seeing Machines 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.| Seeing Machines vs. Aberdeen Diversified Income | Seeing Machines vs. FC Investment Trust | Seeing Machines vs. Intuitive Investments Group | Seeing Machines vs. JB Hunt Transport |
| Dow Jones vs. Skillful Craftsman Education | Dow Jones vs. Acco Brands | Dow Jones vs. Cracker Barrel Old | Dow Jones vs. Coursera |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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