Correlation Between SK Growth and Dow Jones
Can any of the company-specific risk be diversified away by investing in both SK Growth 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 SK Growth and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SK Growth Opportunities and Dow Jones Industrial, you can compare the effects of market volatilities on SK Growth 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 SK Growth with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Growth and Dow Jones.
Diversification Opportunities for SK Growth and Dow Jones
Significant diversification
The 3 months correlation between SKGR and Dow is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding SK Growth Opportunities 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 SK Growth 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 SK Growth Opportunities 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 SK Growth i.e., SK Growth and Dow Jones go up and down completely randomly.
Pair Corralation between SK Growth and Dow Jones
Given the investment horizon of 90 days SK Growth is expected to generate 3.63 times less return on investment than Dow Jones. But when comparing it to its historical volatility, SK Growth Opportunities is 4.74 times less risky than Dow Jones. It trades about 0.2 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 3,870,327 in Dow Jones Industrial on November 3, 2024 and sell it today you would earn a total of 584,139 from holding Dow Jones Industrial or generate 15.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK Growth Opportunities vs. Dow Jones Industrial
Performance |
| Timeline |
SK Growth and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
SK Growth Opportunities
Pair trading matchups for SK Growth
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with SK Growth and Dow Jones
The main advantage of trading using opposite SK Growth and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Growth 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.| SK Growth vs. Four Leaf Acquisition | SK Growth vs. WinVest Acquisition Corp | SK Growth vs. Alpha One | SK Growth vs. Manaris Corp |
| Dow Jones vs. Cincinnati Financial | Dow Jones vs. Kellanova | Dow Jones vs. Acme United | Dow Jones vs. Procter Gamble |
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 CEOs Directory module to screen CEOs from public companies around the world.
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