Correlation Between TPG RE and Dow Jones
Can any of the company-specific risk be diversified away by investing in both TPG RE 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 TPG RE and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TPG RE Finance and Dow Jones Industrial, you can compare the effects of market volatilities on TPG RE 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 TPG RE with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of TPG RE and Dow Jones.
Diversification Opportunities for TPG RE and Dow Jones
Poor diversification
The 3 months correlation between TPG and Dow is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding TPG RE Finance 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 TPG RE 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 TPG RE Finance 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 TPG RE i.e., TPG RE and Dow Jones go up and down completely randomly.
Pair Corralation between TPG RE and Dow Jones
Assuming the 90 days trading horizon TPG RE Finance is expected to under-perform the Dow Jones. But the preferred stock apears to be less risky and, when comparing its historical volatility, TPG RE Finance is 1.11 times less risky than Dow Jones. The preferred stock trades about -0.06 of its potential returns per unit of risk. The Dow Jones Industrial is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 4,223,305 in Dow Jones Industrial on August 30, 2024 and sell it today you would earn a total of 248,901 from holding Dow Jones Industrial or generate 5.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TPG RE Finance vs. Dow Jones Industrial
Performance |
| Timeline |
TPG RE and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
TPG RE Finance
Pair trading matchups for TPG RE
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with TPG RE and Dow Jones
The main advantage of trading using opposite TPG RE and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TPG RE 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.| TPG RE vs. ACRES Commercial Realty | TPG RE vs. Dynex Capital | TPG RE vs. PennyMac Mortgage Investment | TPG RE vs. AG Mortgage Investment |
| 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |