Correlation Between SLR Investment and Dow Jones
Can any of the company-specific risk be diversified away by investing in both SLR Investment 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 SLR Investment and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SLR Investment Corp and Dow Jones Industrial, you can compare the effects of market volatilities on SLR Investment 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 SLR Investment with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of SLR Investment and Dow Jones.
Diversification Opportunities for SLR Investment and Dow Jones
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SLR and Dow is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding SLR Investment 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 SLR Investment 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 SLR Investment 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 SLR Investment i.e., SLR Investment and Dow Jones go up and down completely randomly.
Pair Corralation between SLR Investment and Dow Jones
Given the investment horizon of 90 days SLR Investment Corp is expected to generate 1.15 times more return on investment than Dow Jones. However, SLR Investment is 1.15 times more volatile than Dow Jones Industrial. It trades about 0.25 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.27 per unit of risk. If you would invest 1,557 in SLR Investment Corp on August 29, 2024 and sell it today you would earn a total of 98.00 from holding SLR Investment Corp or generate 6.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SLR Investment Corp vs. Dow Jones Industrial
Performance |
| Timeline |
SLR Investment and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
SLR Investment Corp
Pair trading matchups for SLR Investment
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with SLR Investment and Dow Jones
The main advantage of trading using opposite SLR Investment and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SLR Investment 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.| SLR Investment vs. Horizon Technology Finance | SLR Investment vs. WhiteHorse Finance | SLR Investment vs. Gladstone Capital | SLR Investment vs. PennantPark Floating Rate |
| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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