Correlation Between Silver Elephant and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Silver Elephant 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 Silver Elephant and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Silver Elephant Mining and Dow Jones Industrial, you can compare the effects of market volatilities on Silver Elephant 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 Silver Elephant with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silver Elephant and Dow Jones.
Diversification Opportunities for Silver Elephant and Dow Jones
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Silver and Dow is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Silver Elephant Mining 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 Silver Elephant 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 Silver Elephant Mining 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 Silver Elephant i.e., Silver Elephant and Dow Jones go up and down completely randomly.
Pair Corralation between Silver Elephant and Dow Jones
Assuming the 90 days horizon Silver Elephant Mining is expected to generate 16.85 times more return on investment than Dow Jones. However, Silver Elephant is 16.85 times more volatile than Dow Jones Industrial. It trades about 0.08 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.11 per unit of risk. If you would invest 17.00 in Silver Elephant Mining on September 1, 2024 and sell it today you would earn a total of 18.00 from holding Silver Elephant Mining or generate 105.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Silver Elephant Mining vs. Dow Jones Industrial
Performance |
| Timeline |
Silver Elephant and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Silver Elephant Mining
Pair trading matchups for Silver Elephant
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Silver Elephant and Dow Jones
The main advantage of trading using opposite Silver Elephant and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silver Elephant 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.| Silver Elephant vs. ATT Inc | Silver Elephant vs. Merck Company | Silver Elephant vs. Walt Disney | Silver Elephant vs. Caterpillar |
| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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