Correlation Between Stellar AfricaGold and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Stellar AfricaGold 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 Stellar AfricaGold and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stellar AfricaGold and Dow Jones Industrial, you can compare the effects of market volatilities on Stellar AfricaGold 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 Stellar AfricaGold with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stellar AfricaGold and Dow Jones.
Diversification Opportunities for Stellar AfricaGold and Dow Jones
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Stellar and Dow is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Stellar AfricaGold 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 Stellar AfricaGold 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 Stellar AfricaGold 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 Stellar AfricaGold i.e., Stellar AfricaGold and Dow Jones go up and down completely randomly.
Pair Corralation between Stellar AfricaGold and Dow Jones
Assuming the 90 days horizon Stellar AfricaGold is expected to generate 20.64 times more return on investment than Dow Jones. However, Stellar AfricaGold is 20.64 times more volatile than Dow Jones Industrial. It trades about 0.04 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of risk. If you would invest 40.00 in Stellar AfricaGold on August 30, 2024 and sell it today you would lose (31.00) from holding Stellar AfricaGold or give up 77.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Stellar AfricaGold vs. Dow Jones Industrial
Performance |
| Timeline |
Stellar AfricaGold and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Stellar AfricaGold
Pair trading matchups for Stellar AfricaGold
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Stellar AfricaGold and Dow Jones
The main advantage of trading using opposite Stellar AfricaGold and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stellar AfricaGold 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.| Stellar AfricaGold vs. Richmond Minerals | Stellar AfricaGold vs. Societe d Exploration | Stellar AfricaGold vs. Tesoro Minerals Corp |
| 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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