Correlation Between Micro Silver and Mini Dow
Can any of the company-specific risk be diversified away by investing in both Micro Silver and Mini Dow 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 Micro Silver and Mini Dow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micro Silver Futures and Mini Dow Jones, you can compare the effects of market volatilities on Micro Silver and Mini Dow 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 Micro Silver with a short position of Mini Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micro Silver and Mini Dow.
Diversification Opportunities for Micro Silver and Mini Dow
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Micro and Mini is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Micro Silver Futures and Mini Dow Jones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mini Dow Jones and Micro Silver 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 Micro Silver Futures are associated (or correlated) with Mini Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mini Dow Jones has no effect on the direction of Micro Silver i.e., Micro Silver and Mini Dow go up and down completely randomly.
Pair Corralation between Micro Silver and Mini Dow
Assuming the 90 days trading horizon Micro Silver Futures is expected to under-perform the Mini Dow. In addition to that, Micro Silver is 1.83 times more volatile than Mini Dow Jones. It trades about -0.26 of its total potential returns per unit of risk. Mini Dow Jones is currently generating about 0.25 per unit of volatility. If you would invest 4,260,600 in Mini Dow Jones on August 29, 2024 and sell it today you would earn a total of 239,100 from holding Mini Dow Jones or generate 5.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Micro Silver Futures vs. Mini Dow Jones
Performance |
| Timeline |
| Micro Silver Futures |
| Mini Dow Jones |
Micro Silver and Mini Dow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micro Silver and Mini Dow
The main advantage of trading using opposite Micro Silver and Mini Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micro Silver position performs unexpectedly, Mini Dow 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 Mini Dow will offset losses from the drop in Mini Dow's long position.| Micro Silver vs. Micro E mini Russell | Micro Silver vs. Heating Oil | Micro Silver vs. Aluminum Futures | Micro Silver vs. Micro Gold Futures |
| Mini Dow vs. Live Cattle Futures | Mini Dow vs. US Dollar | Mini Dow vs. Micro E mini Russell | Mini Dow vs. Lumber Futures |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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