Correlation Between AALLN and Dow Jones
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By analyzing existing cross correlation between AALLN 3875 16 MAR 29 and Dow Jones Industrial, you can compare the effects of market volatilities on AALLN 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 AALLN with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of AALLN and Dow Jones.
Diversification Opportunities for AALLN and Dow Jones
Poor diversification
The 3 months correlation between AALLN and Dow is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding AALLN 3875 16 MAR 29 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 AALLN 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 AALLN 3875 16 MAR 29 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 AALLN i.e., AALLN and Dow Jones go up and down completely randomly.
Pair Corralation between AALLN and Dow Jones
Assuming the 90 days trading horizon AALLN 3875 16 MAR 29 is expected to under-perform the Dow Jones. But the bond apears to be less risky and, when comparing its historical volatility, AALLN 3875 16 MAR 29 is 3.36 times less risky than Dow Jones. The bond trades about -0.3 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 4,238,757 in Dow Jones Industrial on August 29, 2024 and sell it today you would earn a total of 247,274 from holding Dow Jones Industrial or generate 5.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 22.73% |
| Values | Daily Returns |
AALLN 3875 16 MAR 29 vs. Dow Jones Industrial
Performance |
| Timeline |
AALLN and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
AALLN 3875 16 MAR 29
Pair trading matchups for AALLN
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with AALLN and Dow Jones
The main advantage of trading using opposite AALLN and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AALLN 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.The idea behind AALLN 3875 16 MAR 29 and Dow Jones Industrial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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