Correlation Between Dow Jones and China Enterprise
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By analyzing existing cross correlation between Dow Jones Industrial and China Enterprise Co, you can compare the effects of market volatilities on Dow Jones and China Enterprise 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 China Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and China Enterprise.
Diversification Opportunities for Dow Jones and China Enterprise
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dow and China is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and China Enterprise Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Enterprise 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 Industrial are associated (or correlated) with China Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Enterprise has no effect on the direction of Dow Jones i.e., Dow Jones and China Enterprise go up and down completely randomly.
Pair Corralation between Dow Jones and China Enterprise
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the China Enterprise. But the index apears to be less risky and, when comparing its historical volatility, Dow Jones Industrial is 4.14 times less risky than China Enterprise. The index trades about -0.21 of its potential returns per unit of risk. The China Enterprise Co is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 295.00 in China Enterprise Co on September 25, 2024 and sell it today you would lose (7.00) from holding China Enterprise Co or give up 2.37% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Dow Jones Industrial vs. China Enterprise Co
Performance |
Timeline |
Dow Jones and China Enterprise Volatility Contrast
Predicted Return Density |
Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
China Enterprise Co
Pair trading matchups for China Enterprise
Pair Trading with Dow Jones and China Enterprise
The main advantage of trading using opposite Dow Jones and China Enterprise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, China Enterprise 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 China Enterprise will offset losses from the drop in China Enterprise's long position.Dow Jones vs. Aerofoam Metals | Dow Jones vs. Lion One Metals | Dow Jones vs. Blue Moon Metals | Dow Jones vs. Xunlei Ltd Adr |
China Enterprise vs. Guangdong Marubi Biotechnology | China Enterprise vs. Ningbo MedicalSystem Biotechnology | China Enterprise vs. Jinling Hotel Corp | China Enterprise vs. Shanghai Rendu Biotechnology |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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