Correlation Between VCI Global and Dow Jones
Can any of the company-specific risk be diversified away by investing in both VCI Global 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 VCI Global and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VCI Global Limited and Dow Jones Industrial, you can compare the effects of market volatilities on VCI Global 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 VCI Global with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of VCI Global and Dow Jones.
Diversification Opportunities for VCI Global and Dow Jones
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between VCI and Dow is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding VCI Global Limited 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 VCI Global 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 VCI Global Limited 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 VCI Global i.e., VCI Global and Dow Jones go up and down completely randomly.
Pair Corralation between VCI Global and Dow Jones
Given the investment horizon of 90 days VCI Global Limited is expected to generate 41.08 times more return on investment than Dow Jones. However, VCI Global is 41.08 times more volatile than Dow Jones Industrial. It trades about 0.01 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.09 per unit of risk. If you would invest 20,824 in VCI Global Limited on November 19, 2024 and sell it today you would lose (20,731) from holding VCI Global Limited or give up 99.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 93.55% |
| Values | Daily Returns |
VCI Global Limited vs. Dow Jones Industrial
Performance |
| Timeline |
VCI Global and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
VCI Global Limited
Pair trading matchups for VCI Global
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with VCI Global and Dow Jones
The main advantage of trading using opposite VCI Global and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VCI Global 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.| VCI Global vs. CRA International | VCI Global vs. ICF International | VCI Global vs. Forrester Research | VCI Global vs. Huron Consulting Group |
| Dow Jones vs. National CineMedia | Dow Jones vs. Emerson Radio | Dow Jones vs. Space Communication | Dow Jones vs. JD Sports Fashion |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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