Correlation Between SEED and Dow Jones
Can any of the company-specific risk be diversified away by investing in both SEED 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 SEED and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEED LIMITED and Dow Jones Industrial, you can compare the effects of market volatilities on SEED 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 SEED with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEED and Dow Jones.
Diversification Opportunities for SEED and Dow Jones
Modest diversification
The 3 months correlation between SEED and Dow is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding SEED 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 SEED 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 SEED 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 SEED i.e., SEED and Dow Jones go up and down completely randomly.
Pair Corralation between SEED and Dow Jones
Assuming the 90 days trading horizon SEED LIMITED is expected to under-perform the Dow Jones. In addition to that, SEED is 5.85 times more volatile than Dow Jones Industrial. It trades about -0.44 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.22 per unit of volatility. If you would invest 4,424,783 in Dow Jones Industrial on October 11, 2024 and sell it today you would lose (161,263) from holding Dow Jones Industrial or give up 3.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 86.36% |
| Values | Daily Returns |
SEED LIMITED vs. Dow Jones Industrial
Performance |
| Timeline |
SEED and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
SEED LIMITED
Pair trading matchups for SEED
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with SEED and Dow Jones
The main advantage of trading using opposite SEED and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEED 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.| SEED vs. STAR AFRICA PORATION | SEED vs. CAFCA LIMITED | SEED vs. FIRST MUTUAL PROPERTIES | SEED vs. AFRICAN DISTILLERS LIMITED |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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