Correlation Between Aig Government and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Aig Government 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 Aig Government and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aig Government Money and Dow Jones Industrial, you can compare the effects of market volatilities on Aig Government 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 Aig Government with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aig Government and Dow Jones.
Diversification Opportunities for Aig Government and Dow Jones
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aig and Dow is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Aig Government Money 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 Aig Government 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 Aig Government Money 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 Aig Government i.e., Aig Government and Dow Jones go up and down completely randomly.
Pair Corralation between Aig Government and Dow Jones
Assuming the 90 days horizon Aig Government Money is expected to generate 0.28 times more return on investment than Dow Jones. However, Aig Government Money is 3.54 times less risky than Dow Jones. It trades about 0.22 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.19 per unit of risk. If you would invest 1,005 in Aig Government Money on November 28, 2024 and sell it today you would earn a total of 8.00 from holding Aig Government Money or generate 0.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aig Government Money vs. Dow Jones Industrial
Performance |
| Timeline |
| Aig Government Money |
| Dow Jones Industrial |
Aig Government and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aig Government and Dow Jones
The main advantage of trading using opposite Aig Government and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aig Government 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.| Aig Government vs. Goldman Sachs Financial | Aig Government vs. Angel Oak Financial | Aig Government vs. 1919 Financial Services | Aig Government vs. Blackrock Financial Institutions |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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