Correlation Between VerifyMe and Dow Jones
Can any of the company-specific risk be diversified away by investing in both VerifyMe 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 VerifyMe and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VerifyMe and Dow Jones Industrial, you can compare the effects of market volatilities on VerifyMe 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 VerifyMe with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of VerifyMe and Dow Jones.
Diversification Opportunities for VerifyMe and Dow Jones
Good diversification
The 3 months correlation between VerifyMe and Dow is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding VerifyMe 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 VerifyMe 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 VerifyMe 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 VerifyMe i.e., VerifyMe and Dow Jones go up and down completely randomly.
Pair Corralation between VerifyMe and Dow Jones
Assuming the 90 days horizon VerifyMe is expected to generate 202.48 times more return on investment than Dow Jones. However, VerifyMe is 202.48 times more volatile than Dow Jones Industrial. It trades about 0.15 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of risk. If you would invest 18.00 in VerifyMe on August 26, 2024 and sell it today you would lose (14.96) from holding VerifyMe or give up 83.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 48.89% |
| Values | Daily Returns |
VerifyMe vs. Dow Jones Industrial
Performance |
| Timeline |
VerifyMe and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
VerifyMe
Pair trading matchups for VerifyMe
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with VerifyMe and Dow Jones
The main advantage of trading using opposite VerifyMe and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VerifyMe 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 VerifyMe 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. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |