Correlation Between Nine Mile and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Nine Mile 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 Nine Mile and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nine Mile Metals and Dow Jones Industrial, you can compare the effects of market volatilities on Nine Mile 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 Nine Mile with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nine Mile and Dow Jones.
Diversification Opportunities for Nine Mile and Dow Jones
Good diversification
The 3 months correlation between Nine and Dow is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Nine Mile Metals 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 Nine Mile 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 Nine Mile Metals 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 Nine Mile i.e., Nine Mile and Dow Jones go up and down completely randomly.
Pair Corralation between Nine Mile and Dow Jones
Assuming the 90 days horizon Nine Mile Metals is expected to generate 10.24 times more return on investment than Dow Jones. However, Nine Mile is 10.24 times more volatile than Dow Jones Industrial. It trades about 0.03 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.11 per unit of risk. If you would invest 1.32 in Nine Mile Metals on October 21, 2024 and sell it today you would earn a total of 0.00 from holding Nine Mile Metals or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Nine Mile Metals vs. Dow Jones Industrial
Performance |
| Timeline |
Nine Mile and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Nine Mile Metals
Pair trading matchups for Nine Mile
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Nine Mile and Dow Jones
The main advantage of trading using opposite Nine Mile and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nine Mile 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.| Nine Mile vs. Endurance Gold | Nine Mile vs. Red Pine Exploration | Nine Mile vs. Altamira Gold Corp | Nine Mile vs. Grande Portage Resources |
| Dow Jones vs. SkyWest | Dow Jones vs. Air Transport Services | Dow Jones vs. LATAM Airlines Group | Dow Jones vs. Emerson Radio |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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