Correlation Between STANDARD BANK and Dow Jones
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By analyzing existing cross correlation between STANDARD BANK LIMITED and Dow Jones Industrial, you can compare the effects of market volatilities on STANDARD BANK 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 STANDARD BANK with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of STANDARD BANK and Dow Jones.
Diversification Opportunities for STANDARD BANK and Dow Jones
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between STANDARD and Dow is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding STANDARD BANK LIMITED 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 STANDARD BANK 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 STANDARD BANK LIMITED 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 STANDARD BANK i.e., STANDARD BANK and Dow Jones go up and down completely randomly.
Pair Corralation between STANDARD BANK and Dow Jones
Assuming the 90 days trading horizon STANDARD BANK LIMITED is expected to generate 2.32 times more return on investment than Dow Jones. However, STANDARD BANK is 2.32 times more volatile than Dow Jones Industrial. It trades about 0.21 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 440,001 in STANDARD BANK LIMITED on November 3, 2024 and sell it today you would earn a total of 250,001 from holding STANDARD BANK LIMITED or generate 56.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STANDARD BANK LIMITED vs. Dow Jones Industrial
Performance |
| Timeline |
STANDARD BANK and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
STANDARD BANK LIMITED
Pair trading matchups for STANDARD BANK
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with STANDARD BANK and Dow Jones
The main advantage of trading using opposite STANDARD BANK and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STANDARD BANK 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.The idea behind STANDARD BANK LIMITED and Dow Jones Industrial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Dow Jones vs. Cincinnati Financial | Dow Jones vs. Kellanova | Dow Jones vs. Acme United | Dow Jones vs. Procter Gamble |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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