Correlation Between Scotia International and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Scotia International 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 Scotia International and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scotia International Equity and Dow Jones Industrial, you can compare the effects of market volatilities on Scotia International 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 Scotia International with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scotia International and Dow Jones.
Diversification Opportunities for Scotia International and Dow Jones
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Scotia and Dow is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Scotia International Equity 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 Scotia International 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 Scotia International Equity 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 Scotia International i.e., Scotia International and Dow Jones go up and down completely randomly.
Pair Corralation between Scotia International and Dow Jones
Assuming the 90 days trading horizon Scotia International is expected to generate 4.41 times less return on investment than Dow Jones. But when comparing it to its historical volatility, Scotia International Equity is 1.62 times less risky than Dow Jones. It trades about 0.12 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 4,179,460 in Dow Jones Industrial on September 5, 2024 and sell it today you would earn a total of 291,093 from holding Dow Jones Industrial or generate 6.96% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.65% |
Values | Daily Returns |
Scotia International Equity vs. Dow Jones Industrial
Performance |
Timeline |
Scotia International and Dow Jones Volatility Contrast
Predicted Return Density |
Returns |
Scotia International Equity
Pair trading matchups for Scotia International
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Scotia International and Dow Jones
The main advantage of trading using opposite Scotia International and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scotia International 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.Scotia International vs. First Asset Energy | Scotia International vs. First Asset Tech | Scotia International vs. Harvest Equal Weight | Scotia International vs. CI Canada Lifeco |
Dow Jones vs. Shake Shack | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. Dave Busters Entertainment | Dow Jones vs. Meli Hotels International |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
Transaction History View history of all your transactions and understand their impact on performance | |
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |