Correlation Between Solartron Public and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Solartron Public 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 Solartron Public and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solartron Public and Dow Jones Industrial, you can compare the effects of market volatilities on Solartron Public 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 Solartron Public with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solartron Public and Dow Jones.
Diversification Opportunities for Solartron Public and Dow Jones
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Solartron and Dow is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Solartron Public 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 Solartron Public 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 Solartron Public 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 Solartron Public i.e., Solartron Public and Dow Jones go up and down completely randomly.
Pair Corralation between Solartron Public and Dow Jones
Assuming the 90 days trading horizon Solartron Public is expected to generate 86.25 times more return on investment than Dow Jones. However, Solartron Public is 86.25 times more volatile than Dow Jones Industrial. It trades about 0.05 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.15 per unit of risk. If you would invest 72.00 in Solartron Public on August 29, 2024 and sell it today you would lose (24.00) from holding Solartron Public or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 96.56% |
| Values | Daily Returns |
Solartron Public vs. Dow Jones Industrial
Performance |
| Timeline |
Solartron Public and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Solartron Public
Pair trading matchups for Solartron Public
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Solartron Public and Dow Jones
The main advantage of trading using opposite Solartron Public and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solartron Public 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.| Solartron Public vs. MCS Steel Public | Solartron Public vs. Asia Plus Group | Solartron Public vs. Lalin Property Public | Solartron Public vs. Lam Soon Public |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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