Correlation Between Dow Jones and Supercom
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Supercom 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 Dow Jones and Supercom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Hong and Supercom, you can compare the effects of market volatilities on Dow Jones and Supercom 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 Dow Jones with a short position of Supercom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Supercom.
Diversification Opportunities for Dow Jones and Supercom
Very weak diversification
The 3 months correlation between Dow and Supercom is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Hong and Supercom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supercom and Dow Jones 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 Dow Jones Hong are associated (or correlated) with Supercom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supercom has no effect on the direction of Dow Jones i.e., Dow Jones and Supercom go up and down completely randomly.
Pair Corralation between Dow Jones and Supercom
Assuming the 90 days trading horizon Dow Jones Hong is expected to generate 0.26 times more return on investment than Supercom. However, Dow Jones Hong is 3.86 times less risky than Supercom. It trades about 0.04 of its potential returns per unit of risk. Supercom is currently generating about 0.01 per unit of risk. If you would invest 689,166 in Dow Jones Hong on September 12, 2024 and sell it today you would earn a total of 44,462 from holding Dow Jones Hong or generate 6.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 96.88% |
| Values | Daily Returns |
Dow Jones Hong vs. Supercom
Performance |
| Timeline |
Dow Jones and Supercom Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Hong
Pair trading matchups for Dow Jones
Supercom
Pair trading matchups for Supercom
Pair Trading with Dow Jones and Supercom
The main advantage of trading using opposite Dow Jones and Supercom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Supercom 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 Supercom will offset losses from the drop in Supercom's long position.| Dow Jones vs. Summit Environmental | Dow Jones vs. Lincoln Electric Holdings | Dow Jones vs. Steven Madden | Dow Jones vs. Timken Company |
| Supercom vs. Zedcor Inc | Supercom vs. SSC Security Services | Supercom vs. Blue Line Protection | Supercom vs. Guardforce AI 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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