Correlation Between GROUNDS REST and Dow Jones
Can any of the company-specific risk be diversified away by investing in both GROUNDS REST 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 GROUNDS REST and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GROUNDS REST NA and Dow Jones Industrial, you can compare the effects of market volatilities on GROUNDS REST 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 GROUNDS REST with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of GROUNDS REST and Dow Jones.
Diversification Opportunities for GROUNDS REST and Dow Jones
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between GROUNDS and Dow is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding GROUNDS REST NA 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 GROUNDS REST 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 GROUNDS REST NA 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 GROUNDS REST i.e., GROUNDS REST and Dow Jones go up and down completely randomly.
Pair Corralation between GROUNDS REST and Dow Jones
Assuming the 90 days trading horizon GROUNDS REST NA is expected to generate 10.77 times more return on investment than Dow Jones. However, GROUNDS REST is 10.77 times more volatile than Dow Jones Industrial. It trades about 0.08 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.06 per unit of risk. If you would invest 101.00 in GROUNDS REST NA on November 18, 2024 and sell it today you would earn a total of 20.00 from holding GROUNDS REST NA or generate 19.8% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 96.77% |
Values | Daily Returns |
GROUNDS REST NA vs. Dow Jones Industrial
Performance |
Timeline |
GROUNDS REST and Dow Jones Volatility Contrast
Predicted Return Density |
Returns |
GROUNDS REST NA
Pair trading matchups for GROUNDS REST
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with GROUNDS REST and Dow Jones
The main advantage of trading using opposite GROUNDS REST and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GROUNDS REST 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.GROUNDS REST vs. COSTAR GROUP INC | ||
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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