Correlation Between Global Lighting and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Global Lighting 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 Global Lighting and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Lighting Technologies and Dow Jones Industrial, you can compare the effects of market volatilities on Global Lighting 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 Global Lighting with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Lighting and Dow Jones.
Diversification Opportunities for Global Lighting and Dow Jones
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Global and Dow is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Global Lighting Technologies 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 Global Lighting 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 Global Lighting Technologies 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 Global Lighting i.e., Global Lighting and Dow Jones go up and down completely randomly.
Pair Corralation between Global Lighting and Dow Jones
Assuming the 90 days trading horizon Global Lighting Technologies is expected to generate 1.24 times more return on investment than Dow Jones. However, Global Lighting is 1.24 times more volatile than Dow Jones Industrial. It trades about 0.22 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.25 per unit of risk. If you would invest 5,450 in Global Lighting Technologies on December 4, 2024 and sell it today you would earn a total of 250.00 from holding Global Lighting Technologies or generate 4.59% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Global Lighting Technologies vs. Dow Jones Industrial
Performance |
Timeline |
Global Lighting and Dow Jones Volatility Contrast
Predicted Return Density |
Returns |
Global Lighting Technologies
Pair trading matchups for Global Lighting
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Global Lighting and Dow Jones
The main advantage of trading using opposite Global Lighting and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Lighting 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.Global Lighting vs. Sunplus Technology Co | Global Lighting vs. Silicon Integrated Systems | Global Lighting vs. Realtek Semiconductor Corp | Global Lighting vs. Elan Microelectronics Corp |
Dow Jones vs. Balchem | Dow Jones vs. Merit Medical Systems | Dow Jones vs. American Vanguard | Dow Jones vs. Regeneron Pharmaceuticals |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
Global Correlations Find global opportunities by holding instruments from different markets | |
Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |