Correlation Between San Miguel and Dow Jones
Can any of the company-specific risk be diversified away by investing in both San Miguel 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 San Miguel and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between San Miguel Corp and Dow Jones Industrial, you can compare the effects of market volatilities on San Miguel 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 San Miguel with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of San Miguel and Dow Jones.
Diversification Opportunities for San Miguel and Dow Jones
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between San and Dow is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding San Miguel 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 San Miguel 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 San Miguel 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 San Miguel i.e., San Miguel and Dow Jones go up and down completely randomly.
Pair Corralation between San Miguel and Dow Jones
Assuming the 90 days trading horizon San Miguel Corp is expected to under-perform the Dow Jones. In addition to that, San Miguel is 1.72 times more volatile than Dow Jones Industrial. It trades about -0.06 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.14 per unit of volatility. If you would invest 4,139,378 in Dow Jones Industrial on September 13, 2024 and sell it today you would earn a total of 275,478 from holding Dow Jones Industrial or generate 6.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
San Miguel Corp vs. Dow Jones Industrial
Performance |
| Timeline |
San Miguel and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
San Miguel Corp
Pair trading matchups for San Miguel
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with San Miguel and Dow Jones
The main advantage of trading using opposite San Miguel and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if San Miguel 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.| San Miguel vs. Converge Information Communications | San Miguel vs. Bank of the | San Miguel vs. Security Bank Corp | San Miguel vs. East West Banking |
| Dow Jones vs. ChampionX | Dow Jones vs. Highway Holdings Limited | Dow Jones vs. Westinghouse Air Brake | Dow Jones vs. Cementos Pacasmayo SAA |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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