Correlation Between YY and Dow Jones
Can any of the company-specific risk be diversified away by investing in both YY 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 YY and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between YY Inc Class and Dow Jones Industrial, you can compare the effects of market volatilities on YY 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 YY with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of YY and Dow Jones.
Diversification Opportunities for YY and Dow Jones
Weak diversification
The 3 months correlation between YY and Dow is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding YY Inc Class 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 YY 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 YY Inc Class 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 YY i.e., YY and Dow Jones go up and down completely randomly.
Pair Corralation between YY and Dow Jones
Allowing for the 90-day total investment horizon YY Inc Class is expected to generate 4.62 times more return on investment than Dow Jones. However, YY is 4.62 times more volatile than Dow Jones Industrial. It trades about 0.18 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.2 per unit of risk. If you would invest 4,294 in YY Inc Class on November 18, 2024 and sell it today you would earn a total of 421.00 from holding YY Inc Class or generate 9.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
YY Inc Class vs. Dow Jones Industrial
Performance |
| Timeline |
YY and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
YY Inc Class
Pair trading matchups for YY
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with YY and Dow Jones
The main advantage of trading using opposite YY and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YY 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.| YY vs. Weibo Corp | YY vs. DouYu International Holdings | YY vs. Tencent Music Entertainment | YY vs. Autohome |
| Dow Jones vs. Palomar Holdings | Dow Jones vs. Mesa Air Group | Dow Jones vs. LATAM Airlines Group | Dow Jones vs. Unum Group |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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