Correlation Between United Guardian and Dow
Can any of the company-specific risk be diversified away by investing in both United Guardian and Dow 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 Guardian and Dow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Guardian and Dow Inc, you can compare the effects of market volatilities on United Guardian and Dow 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 Guardian with a short position of Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Guardian and Dow.
Diversification Opportunities for United Guardian and Dow
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between United and Dow is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding United Guardian and Dow Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Inc and United Guardian 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 Guardian are associated (or correlated) with Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Inc has no effect on the direction of United Guardian i.e., United Guardian and Dow go up and down completely randomly.
Pair Corralation between United Guardian and Dow
Allowing for the 90-day total investment horizon United Guardian is expected to under-perform the Dow. In addition to that, United Guardian is 2.31 times more volatile than Dow Inc. It trades about -0.42 of its total potential returns per unit of risk. Dow Inc is currently generating about -0.29 per unit of volatility. If you would invest 5,011 in Dow Inc on August 27, 2024 and sell it today you would lose (465.00) from holding Dow Inc or give up 9.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Guardian vs. Dow Inc
Performance |
| Timeline |
| United Guardian |
| Dow Inc |
United Guardian and Dow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Guardian and Dow
The main advantage of trading using opposite United Guardian and Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Guardian position performs unexpectedly, Dow 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 will offset losses from the drop in Dow's long position.| United Guardian vs. Utah Medical Products | United Guardian vs. Union Bankshares | United Guardian vs. Psychemedics | United Guardian vs. Unity Bancorp |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |