Correlation Between Tokyo Electric and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Tokyo Electric 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 Tokyo Electric and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tokyo Electric Power and Dow Jones Industrial, you can compare the effects of market volatilities on Tokyo Electric 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 Tokyo Electric with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tokyo Electric and Dow Jones.
Diversification Opportunities for Tokyo Electric and Dow Jones
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tokyo and Dow is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Tokyo Electric Power 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 Tokyo Electric 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 Tokyo Electric Power 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 Tokyo Electric i.e., Tokyo Electric and Dow Jones go up and down completely randomly.
Pair Corralation between Tokyo Electric and Dow Jones
Assuming the 90 days horizon Tokyo Electric Power is expected to generate 6.26 times more return on investment than Dow Jones. However, Tokyo Electric is 6.26 times more volatile than Dow Jones Industrial. It trades about 0.02 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.12 per unit of risk. If you would invest 360.00 in Tokyo Electric Power on August 31, 2024 and sell it today you would earn a total of 1.00 from holding Tokyo Electric Power or generate 0.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Tokyo Electric Power vs. Dow Jones Industrial
Performance |
| Timeline |
Tokyo Electric and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Tokyo Electric Power
Pair trading matchups for Tokyo Electric
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Tokyo Electric and Dow Jones
The main advantage of trading using opposite Tokyo Electric and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tokyo Electric 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.| Tokyo Electric vs. Alternus Energy Group | Tokyo Electric vs. First National Energy | Tokyo Electric vs. Atlantica Sustainable Infrastructure | Tokyo Electric vs. Brookfield Renewable Partners |
| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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