Correlation Between SHIN-ETSU CHEMICAL and Dow Jones
Can any of the company-specific risk be diversified away by investing in both SHIN-ETSU CHEMICAL 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 SHIN-ETSU CHEMICAL and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SHIN ETSU CHEMICAL and Dow Jones Industrial, you can compare the effects of market volatilities on SHIN-ETSU CHEMICAL 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 SHIN-ETSU CHEMICAL with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHIN-ETSU CHEMICAL and Dow Jones.
Diversification Opportunities for SHIN-ETSU CHEMICAL and Dow Jones
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SHIN-ETSU and Dow is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding SHIN ETSU CHEMICAL 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 SHIN-ETSU CHEMICAL 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 SHIN ETSU CHEMICAL 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 SHIN-ETSU CHEMICAL i.e., SHIN-ETSU CHEMICAL and Dow Jones go up and down completely randomly.
Pair Corralation between SHIN-ETSU CHEMICAL and Dow Jones
Assuming the 90 days trading horizon SHIN ETSU CHEMICAL is expected to generate 3.06 times more return on investment than Dow Jones. However, SHIN-ETSU CHEMICAL is 3.06 times more volatile than Dow Jones Industrial. It trades about 0.05 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.09 per unit of risk. If you would invest 2,245 in SHIN ETSU CHEMICAL on August 28, 2024 and sell it today you would earn a total of 1,253 from holding SHIN ETSU CHEMICAL or generate 55.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.35% |
| Values | Daily Returns |
SHIN ETSU CHEMICAL vs. Dow Jones Industrial
Performance |
| Timeline |
SHIN-ETSU CHEMICAL and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
SHIN ETSU CHEMICAL
Pair trading matchups for SHIN-ETSU CHEMICAL
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with SHIN-ETSU CHEMICAL and Dow Jones
The main advantage of trading using opposite SHIN-ETSU CHEMICAL and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SHIN-ETSU CHEMICAL 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.| SHIN-ETSU CHEMICAL vs. Apple Inc | SHIN-ETSU CHEMICAL vs. Apple Inc | SHIN-ETSU CHEMICAL vs. Apple Inc | SHIN-ETSU CHEMICAL vs. Apple Inc |
| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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