Correlation Between STATE and Dow Jones
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By analyzing existing cross correlation between STATE STREET P and Dow Jones Industrial, you can compare the effects of market volatilities on STATE 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 STATE with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of STATE and Dow Jones.
Diversification Opportunities for STATE and Dow Jones
Pay attention - limited upside
The 3 months correlation between STATE and Dow is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding STATE STREET P 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 STATE 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 STATE STREET P 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 STATE i.e., STATE and Dow Jones go up and down completely randomly.
Pair Corralation between STATE and Dow Jones
Assuming the 90 days trading horizon STATE is expected to generate 3.81 times less return on investment than Dow Jones. But when comparing it to its historical volatility, STATE STREET P is 2.33 times less risky than Dow Jones. It trades about 0.17 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 4,214,154 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 258,052 from holding Dow Jones Industrial or generate 6.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
STATE STREET P vs. Dow Jones Industrial
Performance |
| Timeline |
STATE and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
STATE STREET P
Pair trading matchups for STATE
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with STATE and Dow Jones
The main advantage of trading using opposite STATE and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STATE 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.| STATE vs. Molson Coors Brewing | STATE vs. Compania Cervecerias Unidas | STATE vs. Vita Coco | STATE vs. Abcellera Biologics |
| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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