Correlation Between TJX Companies and Dow Jones
Can any of the company-specific risk be diversified away by investing in both TJX Companies 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 TJX Companies and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The TJX Companies and Dow Jones Industrial, you can compare the effects of market volatilities on TJX Companies 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 TJX Companies with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of TJX Companies and Dow Jones.
Diversification Opportunities for TJX Companies and Dow Jones
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between TJX and Dow is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding The TJX Companies 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 TJX Companies 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 The TJX Companies 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 TJX Companies i.e., TJX Companies and Dow Jones go up and down completely randomly.
Pair Corralation between TJX Companies and Dow Jones
Assuming the 90 days trading horizon The TJX Companies is expected to generate 2.44 times more return on investment than Dow Jones. However, TJX Companies is 2.44 times more volatile than Dow Jones Industrial. It trades about 0.36 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.36 per unit of risk. If you would invest 65,896 in The TJX Companies on September 4, 2024 and sell it today you would earn a total of 10,647 from holding The TJX Companies or generate 16.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 90.48% |
| Values | Daily Returns |
The TJX Companies vs. Dow Jones Industrial
Performance |
| Timeline |
TJX Companies and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
The TJX Companies
Pair trading matchups for TJX Companies
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with TJX Companies and Dow Jones
The main advantage of trading using opposite TJX Companies and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TJX Companies 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.| TJX Companies vs. GP Investments | TJX Companies vs. G2D Investments | TJX Companies vs. Align Technology | TJX Companies vs. Unity Software |
| Dow Jones vs. Gentex | Dow Jones vs. American Axle Manufacturing | Dow Jones vs. Pearson PLC ADR | Dow Jones vs. Marine Products |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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