Correlation Between ASPEN TECHINC and Dow Jones
Can any of the company-specific risk be diversified away by investing in both ASPEN TECHINC 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 ASPEN TECHINC and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASPEN TECHINC DL and Dow Jones Industrial, you can compare the effects of market volatilities on ASPEN TECHINC 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 ASPEN TECHINC with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASPEN TECHINC and Dow Jones.
Diversification Opportunities for ASPEN TECHINC and Dow Jones
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ASPEN and Dow is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding ASPEN TECHINC DL 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 ASPEN TECHINC 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 ASPEN TECHINC DL 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 ASPEN TECHINC i.e., ASPEN TECHINC and Dow Jones go up and down completely randomly.
Pair Corralation between ASPEN TECHINC and Dow Jones
Assuming the 90 days horizon ASPEN TECHINC DL is expected to generate 2.06 times more return on investment than Dow Jones. However, ASPEN TECHINC is 2.06 times more volatile than Dow Jones Industrial. It trades about 0.21 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.21 per unit of risk. If you would invest 21,200 in ASPEN TECHINC DL on August 25, 2024 and sell it today you would earn a total of 2,000 from holding ASPEN TECHINC DL or generate 9.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASPEN TECHINC DL vs. Dow Jones Industrial
Performance |
| Timeline |
ASPEN TECHINC and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
ASPEN TECHINC DL
Pair trading matchups for ASPEN TECHINC
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with ASPEN TECHINC and Dow Jones
The main advantage of trading using opposite ASPEN TECHINC and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASPEN TECHINC 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.| ASPEN TECHINC vs. Salesforce | ASPEN TECHINC vs. Nemetschek AG ON | ASPEN TECHINC vs. PagerDuty | ASPEN TECHINC vs. Superior Plus Corp |
| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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