Correlation Between Sky Gold and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Sky Gold 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 Sky Gold and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sky Gold Corp and Dow Jones Industrial, you can compare the effects of market volatilities on Sky Gold 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 Sky Gold with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sky Gold and Dow Jones.
Diversification Opportunities for Sky Gold and Dow Jones
Good diversification
The 3 months correlation between Sky and Dow is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Sky Gold Corp 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 Sky Gold 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 Sky Gold Corp 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 Sky Gold i.e., Sky Gold and Dow Jones go up and down completely randomly.
Pair Corralation between Sky Gold and Dow Jones
Assuming the 90 days trading horizon Sky Gold Corp is expected to generate 13.3 times more return on investment than Dow Jones. However, Sky Gold is 13.3 times more volatile than Dow Jones Industrial. It trades about 0.01 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 9.00 in Sky Gold Corp on August 31, 2024 and sell it today you would lose (6.00) from holding Sky Gold Corp or give up 66.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Sky Gold Corp vs. Dow Jones Industrial
Performance |
| Timeline |
Sky Gold and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Sky Gold Corp
Pair trading matchups for Sky Gold
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Sky Gold and Dow Jones
The main advantage of trading using opposite Sky Gold and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sky Gold 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.| Sky Gold vs. ArcWest Exploration | Sky Gold vs. Golden Ridge Resources | Sky Gold vs. Silver Bull Resources | Sky Gold vs. Silver Predator Corp |
| 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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