Correlation Between Weir Group and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Weir Group 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 Weir Group and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weir Group PLC and Dow Jones Industrial, you can compare the effects of market volatilities on Weir Group 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 Weir Group with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weir Group and Dow Jones.
Diversification Opportunities for Weir Group and Dow Jones
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Weir and Dow is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Weir Group PLC 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 Weir Group 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 Weir Group PLC 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 Weir Group i.e., Weir Group and Dow Jones go up and down completely randomly.
Pair Corralation between Weir Group and Dow Jones
Assuming the 90 days horizon Weir Group PLC is expected to generate 2.39 times more return on investment than Dow Jones. However, Weir Group is 2.39 times more volatile than Dow Jones Industrial. It trades about 0.11 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.15 per unit of risk. If you would invest 1,190 in Weir Group PLC on November 3, 2024 and sell it today you would earn a total of 298.00 from holding Weir Group PLC or generate 25.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.66% |
| Values | Daily Returns |
Weir Group PLC vs. Dow Jones Industrial
Performance |
| Timeline |
Weir Group and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Weir Group PLC
Pair trading matchups for Weir Group
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Weir Group and Dow Jones
The main advantage of trading using opposite Weir Group and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weir Group 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.| Weir Group vs. Greenshift Corp | Weir Group vs. Next Hydrogen Solutions | Weir Group vs. Quality Industrial Corp | Weir Group vs. Titan Logix Corp |
| Dow Jones vs. Cincinnati Financial | Dow Jones vs. Kellanova | Dow Jones vs. Acme United | Dow Jones vs. Procter Gamble |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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