Correlation Between Solitron Devices and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Solitron Devices 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 Solitron Devices and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solitron Devices and Dow Jones Industrial, you can compare the effects of market volatilities on Solitron Devices 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 Solitron Devices with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solitron Devices and Dow Jones.
Diversification Opportunities for Solitron Devices and Dow Jones
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Solitron and Dow is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Solitron Devices 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 Solitron Devices 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 Solitron Devices 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 Solitron Devices i.e., Solitron Devices and Dow Jones go up and down completely randomly.
Pair Corralation between Solitron Devices and Dow Jones
Given the investment horizon of 90 days Solitron Devices is expected to under-perform the Dow Jones. In addition to that, Solitron Devices is 3.86 times more volatile than Dow Jones Industrial. It trades about -0.07 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.17 per unit of volatility. If you would invest 4,233,015 in Dow Jones Industrial on August 29, 2024 and sell it today you would earn a total of 253,016 from holding Dow Jones Industrial or generate 5.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solitron Devices vs. Dow Jones Industrial
Performance |
| Timeline |
Solitron Devices and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Solitron Devices
Pair trading matchups for Solitron Devices
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Solitron Devices and Dow Jones
The main advantage of trading using opposite Solitron Devices and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solitron Devices 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.| Solitron Devices vs. Nova | Solitron Devices vs. inTest | Solitron Devices vs. Onto Innovation | Solitron Devices vs. Kulicke and Soffa |
| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |