Correlation Between Strong Global and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Strong Global 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 Strong Global and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strong Global Entertainment, and Dow Jones Industrial, you can compare the effects of market volatilities on Strong Global 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 Strong Global with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strong Global and Dow Jones.
Diversification Opportunities for Strong Global and Dow Jones
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Strong and Dow is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Strong Global Entertainment, 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 Strong Global 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 Strong Global Entertainment, 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 Strong Global i.e., Strong Global and Dow Jones go up and down completely randomly.
Pair Corralation between Strong Global and Dow Jones
Considering the 90-day investment horizon Strong Global Entertainment, is expected to generate 13.17 times more return on investment than Dow Jones. However, Strong Global is 13.17 times more volatile than Dow Jones Industrial. It trades about 0.01 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 371.00 in Strong Global Entertainment, on August 27, 2024 and sell it today you would lose (216.00) from holding Strong Global Entertainment, or give up 58.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 69.96% |
| Values | Daily Returns |
Strong Global Entertainment, vs. Dow Jones Industrial
Performance |
| Timeline |
Strong Global and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Strong Global Entertainment,
Pair trading matchups for Strong Global
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Strong Global and Dow Jones
The main advantage of trading using opposite Strong Global and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strong Global 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.| Strong Global vs. PGE Corp | Strong Global vs. Naked Wines plc | Strong Global vs. Willamette Valley Vineyards | Strong Global vs. Constellation Brands Class |
| Dow Jones vs. MI Homes | Dow Jones vs. Franklin Street Properties | Dow Jones vs. Summit Hotel Properties | Dow Jones vs. Portillos |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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