Correlation Between UNITED and Dow Jones
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By analyzing existing cross correlation between UNITED PARCEL SERVICE and Dow Jones Industrial, you can compare the effects of market volatilities on UNITED 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 with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED and Dow Jones.
Diversification Opportunities for UNITED and Dow Jones
Pay attention - limited upside
The 3 months correlation between UNITED and Dow is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding UNITED PARCEL SERVICE 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 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 PARCEL SERVICE 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 i.e., UNITED and Dow Jones go up and down completely randomly.
Pair Corralation between UNITED and Dow Jones
Assuming the 90 days trading horizon UNITED is expected to generate 9.87 times less return on investment than Dow Jones. But when comparing it to its historical volatility, UNITED PARCEL SERVICE is 2.32 times less risky than Dow Jones. It trades about 0.04 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 3,880,733 in Dow Jones Industrial on September 3, 2024 and sell it today you would earn a total of 597,467 from holding Dow Jones Industrial or generate 15.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.4% |
| Values | Daily Returns |
UNITED PARCEL SERVICE vs. Dow Jones Industrial
Performance |
| Timeline |
UNITED and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
UNITED PARCEL SERVICE
Pair trading matchups for UNITED
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with UNITED and Dow Jones
The main advantage of trading using opposite UNITED and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED 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 UNITED PARCEL SERVICE 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. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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