Correlation Between Zhong Yang and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Zhong Yang 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 Zhong Yang and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zhong Yang Financial and Dow Jones Industrial, you can compare the effects of market volatilities on Zhong Yang 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 Zhong Yang with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhong Yang and Dow Jones.
Diversification Opportunities for Zhong Yang and Dow Jones
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Zhong and Dow is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Zhong Yang Financial 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 Zhong Yang 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 Zhong Yang Financial 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 Zhong Yang i.e., Zhong Yang and Dow Jones go up and down completely randomly.
Pair Corralation between Zhong Yang and Dow Jones
Considering the 90-day investment horizon Zhong Yang Financial is expected to under-perform the Dow Jones. In addition to that, Zhong Yang is 4.43 times more volatile than Dow Jones Industrial. It trades about -0.06 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.34 per unit of volatility. If you would invest 4,239,227 in Dow Jones Industrial on November 3, 2024 and sell it today you would earn a total of 215,239 from holding Dow Jones Industrial or generate 5.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Zhong Yang Financial vs. Dow Jones Industrial
Performance |
| Timeline |
Zhong Yang and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Zhong Yang Financial
Pair trading matchups for Zhong Yang
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Zhong Yang and Dow Jones
The main advantage of trading using opposite Zhong Yang and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhong Yang 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.| Zhong Yang vs. Netcapital | Zhong Yang vs. Applied Digital | Zhong Yang vs. Magic Empire Global | Zhong Yang vs. Lazard |
| 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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