Correlation Between Wesure Global and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Wesure 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 Wesure 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 Wesure Global Tech and Dow Jones Industrial, you can compare the effects of market volatilities on Wesure 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 Wesure Global with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wesure Global and Dow Jones.
Diversification Opportunities for Wesure Global and Dow Jones
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wesure and Dow is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Wesure Global Tech 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 Wesure 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 Wesure Global Tech 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 Wesure Global i.e., Wesure Global and Dow Jones go up and down completely randomly.
Pair Corralation between Wesure Global and Dow Jones
Assuming the 90 days trading horizon Wesure Global Tech is expected to generate 4.97 times more return on investment than Dow Jones. However, Wesure Global is 4.97 times more volatile than Dow Jones Industrial. It trades about 0.08 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 20,880 in Wesure Global Tech on August 29, 2024 and sell it today you would earn a total of 27,340 from holding Wesure Global Tech or generate 130.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 77.78% |
| Values | Daily Returns |
Wesure Global Tech vs. Dow Jones Industrial
Performance |
| Timeline |
Wesure Global and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Wesure Global Tech
Pair trading matchups for Wesure Global
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Wesure Global and Dow Jones
The main advantage of trading using opposite Wesure Global and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wesure 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.| Wesure Global vs. Brainsway | Wesure Global vs. Mivne Real Estate | Wesure Global vs. Photomyne | Wesure Global vs. Bezeq Israeli Telecommunication |
| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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