Correlation Between WH Group and Dow Jones
Can any of the company-specific risk be diversified away by investing in both WH 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 WH 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 WH Group Limited and Dow Jones Industrial, you can compare the effects of market volatilities on WH 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 WH Group with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of WH Group and Dow Jones.
Diversification Opportunities for WH Group and Dow Jones
Poor diversification
The 3 months correlation between WHGRF and Dow is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding WH Group Limited 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 WH 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 WH Group Limited 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 WH Group i.e., WH Group and Dow Jones go up and down completely randomly.
Pair Corralation between WH Group and Dow Jones
Assuming the 90 days horizon WH Group Limited is expected to generate 22.71 times more return on investment than Dow Jones. However, WH Group is 22.71 times more volatile than Dow Jones Industrial. It trades about 0.1 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.12 per unit of risk. If you would invest 27.00 in WH Group Limited on August 31, 2024 and sell it today you would earn a total of 52.00 from holding WH Group Limited or generate 192.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 54.01% |
| Values | Daily Returns |
WH Group Limited vs. Dow Jones Industrial
Performance |
| Timeline |
WH Group and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
WH Group Limited
Pair trading matchups for WH Group
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with WH Group and Dow Jones
The main advantage of trading using opposite WH Group and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WH 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.| WH Group vs. Premier Foods Plc | WH Group vs. Torque Lifestyle Brands | WH Group vs. Naturally Splendid Enterprises | WH Group vs. Aryzta AG PK |
| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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