Correlation Between Western Acquisition and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Western Acquisition 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 Western Acquisition and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Acquisition Ventures and Dow Jones Hong, you can compare the effects of market volatilities on Western Acquisition 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 Western Acquisition with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Acquisition and Dow Jones.
Diversification Opportunities for Western Acquisition and Dow Jones
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Western and Dow is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Western Acquisition Ventures and Dow Jones Hong in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Hong and Western Acquisition 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 Western Acquisition Ventures 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 Hong has no effect on the direction of Western Acquisition i.e., Western Acquisition and Dow Jones go up and down completely randomly.
Pair Corralation between Western Acquisition and Dow Jones
Given the investment horizon of 90 days Western Acquisition Ventures is expected to generate 1.43 times more return on investment than Dow Jones. However, Western Acquisition is 1.43 times more volatile than Dow Jones Hong. It trades about 0.02 of its potential returns per unit of risk. Dow Jones Hong is currently generating about -0.03 per unit of risk. If you would invest 1,015 in Western Acquisition Ventures on September 3, 2024 and sell it today you would earn a total of 77.00 from holding Western Acquisition Ventures or generate 7.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.06% |
| Values | Daily Returns |
Western Acquisition Ventures vs. Dow Jones Hong
Performance |
| Timeline |
Western Acquisition and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Hong
Pair trading matchups for Dow Jones
Pair Trading with Western Acquisition and Dow Jones
The main advantage of trading using opposite Western Acquisition and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Acquisition 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 Western Acquisition Ventures and Dow Jones Hong 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. Jacobs Solutions | Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Zhihu Inc ADR | Dow Jones vs. Western Acquisition Ventures |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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