Correlation Between Under Armour and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Under Armour 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 Under Armour and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Under Armour C and Dow Jones Industrial, you can compare the effects of market volatilities on Under Armour 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 Under Armour with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Under Armour and Dow Jones.
Diversification Opportunities for Under Armour and Dow Jones
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Under and Dow is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Under Armour C 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 Under Armour 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 Under Armour C 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 Under Armour i.e., Under Armour and Dow Jones go up and down completely randomly.
Pair Corralation between Under Armour and Dow Jones
Allowing for the 90-day total investment horizon Under Armour C is expected to generate 5.98 times more return on investment than Dow Jones. However, Under Armour is 5.98 times more volatile than Dow Jones Industrial. It trades about 0.04 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.1 per unit of risk. If you would invest 827.00 in Under Armour C on August 23, 2024 and sell it today you would earn a total of 16.00 from holding Under Armour C or generate 1.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Under Armour C vs. Dow Jones Industrial
Performance |
| Timeline |
Under Armour and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Under Armour C
Pair trading matchups for Under Armour
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Under Armour and Dow Jones
The main advantage of trading using opposite Under Armour and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Under Armour 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.| Under Armour vs. Levi Strauss Co | Under Armour vs. Columbia Sportswear | Under Armour vs. Hanesbrands | Under Armour vs. PVH Corp |
| Dow Jones vs. Barrick Gold Corp | Dow Jones vs. Jutal Offshore Oil | Dow Jones vs. Eastern Co | Dow Jones vs. Weyco Group |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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