Correlation Between Suncorp Group and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Suncorp Group 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 Suncorp Group and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Suncorp Group Limited and Dow Jones Industrial, you can compare the effects of market volatilities on Suncorp Group 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 Suncorp Group with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suncorp Group and Dow Jones.
Diversification Opportunities for Suncorp Group and Dow Jones
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Suncorp and Dow is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Suncorp Group 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 Suncorp Group 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 Suncorp Group 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 Suncorp Group i.e., Suncorp Group and Dow Jones go up and down completely randomly.
Pair Corralation between Suncorp Group and Dow Jones
Assuming the 90 days horizon Suncorp Group Limited is expected to generate 2.18 times more return on investment than Dow Jones. However, Suncorp Group is 2.18 times more volatile than Dow Jones Industrial. It trades about 0.08 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 668.00 in Suncorp Group Limited on September 3, 2024 and sell it today you would earn a total of 522.00 from holding Suncorp Group Limited or generate 78.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.02% |
| Values | Daily Returns |
Suncorp Group Limited vs. Dow Jones Industrial
Performance |
| Timeline |
Suncorp Group and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Suncorp Group Limited
Pair trading matchups for Suncorp Group
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Suncorp Group and Dow Jones
The main advantage of trading using opposite Suncorp Group and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suncorp Group 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.| Suncorp Group vs. SHIP HEALTHCARE HLDGINC | Suncorp Group vs. Sabra Health Care | Suncorp Group vs. Cardinal Health | Suncorp Group vs. Australian Agricultural |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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