Correlation Between Synthetic Products and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Synthetic Products 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 Synthetic Products and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Synthetic Products Enterprises and Dow Jones Industrial, you can compare the effects of market volatilities on Synthetic Products 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 Synthetic Products with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synthetic Products and Dow Jones.
Diversification Opportunities for Synthetic Products and Dow Jones
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Synthetic and Dow is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Synthetic Products Enterprises 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 Synthetic Products 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 Synthetic Products Enterprises 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 Synthetic Products i.e., Synthetic Products and Dow Jones go up and down completely randomly.
Pair Corralation between Synthetic Products and Dow Jones
Assuming the 90 days trading horizon Synthetic Products Enterprises is expected to generate 5.7 times more return on investment than Dow Jones. However, Synthetic Products is 5.7 times more volatile than Dow Jones Industrial. It trades about 0.14 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.1 per unit of risk. If you would invest 1,309 in Synthetic Products Enterprises on August 25, 2024 and sell it today you would earn a total of 2,497 from holding Synthetic Products Enterprises or generate 190.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.07% |
| Values | Daily Returns |
Synthetic Products Enterprises vs. Dow Jones Industrial
Performance |
| Timeline |
Synthetic Products and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Synthetic Products Enterprises
Pair trading matchups for Synthetic Products
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Synthetic Products and Dow Jones
The main advantage of trading using opposite Synthetic Products and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synthetic Products 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.| Synthetic Products vs. Matco Foods | Synthetic Products vs. Sitara Chemical Industries | Synthetic Products vs. Lotte Chemical Pakistan | Synthetic Products vs. Ghandhara Automobile |
| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
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
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |