Correlation Between Silk Road and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Silk Road 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 Silk Road and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Silk Road Medical and Dow Jones Industrial, you can compare the effects of market volatilities on Silk Road 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 Silk Road with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silk Road and Dow Jones.
Diversification Opportunities for Silk Road and Dow Jones
Poor diversification
The 3 months correlation between Silk and Dow is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Silk Road Medical 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 Silk Road 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 Silk Road Medical 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 Silk Road i.e., Silk Road and Dow Jones go up and down completely randomly.
Pair Corralation between Silk Road and Dow Jones
Given the investment horizon of 90 days Silk Road Medical is expected to generate 6.97 times more return on investment than Dow Jones. However, Silk Road is 6.97 times more volatile than Dow Jones Industrial. It trades about 0.02 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.12 per unit of risk. If you would invest 3,143 in Silk Road Medical on August 31, 2024 and sell it today you would lose (394.00) from holding Silk Road Medical or give up 12.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 87.7% |
| Values | Daily Returns |
Silk Road Medical vs. Dow Jones Industrial
Performance |
| Timeline |
Silk Road and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Silk Road Medical
Pair trading matchups for Silk Road
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Silk Road and Dow Jones
The main advantage of trading using opposite Silk Road and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silk Road 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.| Silk Road vs. LivaNova PLC | Silk Road vs. Orthopediatrics Corp | Silk Road vs. Pulmonx Corp | Silk Road vs. Si Bone |
| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
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..
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |