Correlation Between Western Bulk and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Western Bulk 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 Bulk 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 Bulk Chartering and Dow Jones Industrial, you can compare the effects of market volatilities on Western Bulk 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 Bulk with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Bulk and Dow Jones.
Diversification Opportunities for Western Bulk and Dow Jones
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Western and Dow is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Western Bulk Chartering 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 Western Bulk 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 Bulk Chartering 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 Western Bulk i.e., Western Bulk and Dow Jones go up and down completely randomly.
Pair Corralation between Western Bulk and Dow Jones
Assuming the 90 days horizon Western Bulk Chartering is expected to generate 12.94 times more return on investment than Dow Jones. However, Western Bulk is 12.94 times more volatile than Dow Jones Industrial. It trades about 0.01 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 337.00 in Western Bulk Chartering on August 30, 2024 and sell it today you would lose (186.00) from holding Western Bulk Chartering or give up 55.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Western Bulk Chartering vs. Dow Jones Industrial
Performance |
| Timeline |
Western Bulk and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Western Bulk Chartering
Pair trading matchups for Western Bulk
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Western Bulk and Dow Jones
The main advantage of trading using opposite Western Bulk and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Bulk 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.| Western Bulk vs. SITC International Holdings | Western Bulk vs. Pacific Basin Shipping | Western Bulk vs. SITC International Holdings | Western Bulk vs. Mitsui OSK Lines |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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