Correlation Between Universal Stainless and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Universal Stainless and Dow Jones at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Universal Stainless and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Stainless Alloy and Dow Jones Industrial, you can compare the effects of market volatilities on Universal Stainless 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 Universal Stainless with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Stainless and Dow Jones.
Diversification Opportunities for Universal Stainless and Dow Jones
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Universal and Dow is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Universal Stainless Alloy 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 Universal Stainless 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 Universal Stainless Alloy 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 Universal Stainless i.e., Universal Stainless and Dow Jones go up and down completely randomly.
Pair Corralation between Universal Stainless and Dow Jones
Given the investment horizon of 90 days Universal Stainless is expected to generate 3.42 times less return on investment than Dow Jones. But when comparing it to its historical volatility, Universal Stainless Alloy is 2.53 times less risky than Dow Jones. It trades about 0.19 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 4,238,757 in Dow Jones Industrial on August 28, 2024 and sell it today you would earn a total of 234,900 from holding Dow Jones Industrial or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Stainless Alloy vs. Dow Jones Industrial
Performance |
| Timeline |
Universal Stainless and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Universal Stainless Alloy
Pair trading matchups for Universal Stainless
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Universal Stainless and Dow Jones
The main advantage of trading using opposite Universal Stainless and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Stainless 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.| Universal Stainless vs. Olympic Steel | Universal Stainless vs. Outokumpu Oyj ADR | Universal Stainless vs. Usinas Siderurgicas de | Universal Stainless vs. POSCO Holdings |
| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |