Correlation Between WOODSIDE ENE and Dow Jones
Can any of the company-specific risk be diversified away by investing in both WOODSIDE ENE 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 WOODSIDE ENE and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WOODSIDE ENE SPADR and Dow Jones Industrial, you can compare the effects of market volatilities on WOODSIDE ENE 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 WOODSIDE ENE with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of WOODSIDE ENE and Dow Jones.
Diversification Opportunities for WOODSIDE ENE and Dow Jones
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between WOODSIDE and Dow is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding WOODSIDE ENE SPADR 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 WOODSIDE ENE 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 WOODSIDE ENE SPADR 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 WOODSIDE ENE i.e., WOODSIDE ENE and Dow Jones go up and down completely randomly.
Pair Corralation between WOODSIDE ENE and Dow Jones
Assuming the 90 days horizon WOODSIDE ENE SPADR is expected to generate 2.85 times more return on investment than Dow Jones. However, WOODSIDE ENE is 2.85 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 0.34 per unit of risk. If you would invest 1,390 in WOODSIDE ENE SPADR on September 2, 2024 and sell it today you would earn a total of 120.00 from holding WOODSIDE ENE SPADR or generate 8.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
WOODSIDE ENE SPADR vs. Dow Jones Industrial
Performance |
| Timeline |
WOODSIDE ENE and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
WOODSIDE ENE SPADR
Pair trading matchups for WOODSIDE ENE
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with WOODSIDE ENE and Dow Jones
The main advantage of trading using opposite WOODSIDE ENE and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WOODSIDE ENE 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.| WOODSIDE ENE vs. Consolidated Communications Holdings | WOODSIDE ENE vs. Spirent Communications plc | WOODSIDE ENE vs. Ubisoft Entertainment SA | WOODSIDE ENE vs. Beijing Media |
| Dow Jones vs. Dream Finders Homes | Dow Jones vs. GEN Restaurant Group, | Dow Jones vs. National Beverage Corp | Dow Jones vs. BJs Restaurants |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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