Correlation Between WHITE and Dow Jones
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By analyzing existing cross correlation between WHITE CAP BUYER and Dow Jones Industrial, you can compare the effects of market volatilities on WHITE 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 WHITE with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of WHITE and Dow Jones.
Diversification Opportunities for WHITE and Dow Jones
Poor diversification
The 3 months correlation between WHITE and Dow is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding WHITE CAP BUYER 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 WHITE 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 WHITE CAP BUYER 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 WHITE i.e., WHITE and Dow Jones go up and down completely randomly.
Pair Corralation between WHITE and Dow Jones
Assuming the 90 days trading horizon WHITE is expected to generate 6.85 times less return on investment than Dow Jones. But when comparing it to its historical volatility, WHITE CAP BUYER is 2.76 times less risky than Dow Jones. It trades about 0.15 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 4,179,460 in Dow Jones Industrial on September 4, 2024 and sell it today you would earn a total of 298,740 from holding Dow Jones Industrial or generate 7.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
WHITE CAP BUYER vs. Dow Jones Industrial
Performance |
| Timeline |
WHITE and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
WHITE CAP BUYER
Pair trading matchups for WHITE
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with WHITE and Dow Jones
The main advantage of trading using opposite WHITE and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WHITE 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.| WHITE vs. Axalta Coating Systems | WHITE vs. Mativ Holdings | WHITE vs. Sonida Senior Living | WHITE vs. Cardinal Health |
| Dow Jones vs. Gentex | Dow Jones vs. American Axle Manufacturing | Dow Jones vs. Pearson PLC ADR | Dow Jones vs. Marine Products |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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