Correlation Between United Community and Dow Jones
Can any of the company-specific risk be diversified away by investing in both United Community 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 United Community and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Community Banks, and Dow Jones Industrial, you can compare the effects of market volatilities on United Community 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 United Community with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Community and Dow Jones.
Diversification Opportunities for United Community and Dow Jones
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Dow is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding United Community Banks, 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 United Community 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 United Community Banks, 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 United Community i.e., United Community and Dow Jones go up and down completely randomly.
Pair Corralation between United Community and Dow Jones
Considering the 90-day investment horizon United Community Banks, is expected to generate 3.19 times more return on investment than Dow Jones. However, United Community is 3.19 times more volatile than Dow Jones Industrial. It trades about 0.07 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.11 per unit of risk. If you would invest 2,047 in United Community Banks, on August 26, 2024 and sell it today you would earn a total of 1,380 from holding United Community Banks, or generate 67.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Community Banks, vs. Dow Jones Industrial
Performance |
| Timeline |
United Community and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
United Community Banks,
Pair trading matchups for United Community
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with United Community and Dow Jones
The main advantage of trading using opposite United Community and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Community 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.| United Community vs. Fifth Third Bancorp | United Community vs. Zions Bancorporation | United Community vs. Huntington Bancshares Incorporated | United Community vs. PNC Financial Services |
| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |