Correlation Between Total Energy and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Total Energy 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 Total Energy and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Total Energy Services and Dow Jones Industrial, you can compare the effects of market volatilities on Total Energy 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 Total Energy with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Total Energy and Dow Jones.
Diversification Opportunities for Total Energy and Dow Jones
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Total and Dow is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Total Energy Services 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 Total Energy 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 Total Energy Services 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 Total Energy i.e., Total Energy and Dow Jones go up and down completely randomly.
Pair Corralation between Total Energy and Dow Jones
Assuming the 90 days trading horizon Total Energy Services is expected to generate 1.66 times more return on investment than Dow Jones. However, Total Energy is 1.66 times more volatile than Dow Jones Industrial. It trades about 0.53 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.27 per unit of risk. If you would invest 965.00 in Total Energy Services on August 30, 2024 and sell it today you would earn a total of 200.00 from holding Total Energy Services or generate 20.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Total Energy Services vs. Dow Jones Industrial
Performance |
| Timeline |
Total Energy and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Total Energy Services
Pair trading matchups for Total Energy
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Total Energy and Dow Jones
The main advantage of trading using opposite Total Energy and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Total Energy 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.| Total Energy vs. PHX Energy Services | Total Energy vs. Pason Systems | Total Energy vs. CES Energy Solutions | Total Energy vs. Western Energy Services |
| Dow Jones vs. Skillful Craftsman Education | Dow Jones vs. Acco Brands | Dow Jones vs. Cracker Barrel Old | Dow Jones vs. Coursera |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |