Correlation Between Scotts and Dow Jones
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By analyzing existing cross correlation between Scotts Miracle Gro 525 and Dow Jones Industrial, you can compare the effects of market volatilities on Scotts 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 Scotts with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scotts and Dow Jones.
Diversification Opportunities for Scotts and Dow Jones
Very good diversification
The 3 months correlation between Scotts and Dow is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Scotts Miracle Gro 525 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 Scotts 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 Scotts Miracle Gro 525 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 Scotts i.e., Scotts and Dow Jones go up and down completely randomly.
Pair Corralation between Scotts and Dow Jones
Assuming the 90 days trading horizon Scotts is expected to generate 9.56 times less return on investment than Dow Jones. But when comparing it to its historical volatility, Scotts Miracle Gro 525 is 1.33 times less risky than Dow Jones. It trades about 0.02 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 3,885,286 in Dow Jones Industrial on August 25, 2024 and sell it today you would earn a total of 544,365 from holding Dow Jones Industrial or generate 14.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Scotts Miracle Gro 525 vs. Dow Jones Industrial
Performance |
| Timeline |
Scotts and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Scotts Miracle Gro 525
Pair trading matchups for Scotts
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Scotts and Dow Jones
The main advantage of trading using opposite Scotts and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scotts 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.| Scotts vs. The Coca Cola | Scotts vs. JPMorgan Chase Co | Scotts vs. Dupont De Nemours | Scotts vs. Alcoa Corp |
| Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. Titan Machinery | Dow Jones vs. Simon Property 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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