Correlation Between Dow Jones and Aeluma

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Aeluma 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 Dow Jones and Aeluma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Aeluma Inc, you can compare the effects of market volatilities on Dow Jones and Aeluma 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 Aeluma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Aeluma.

Diversification Opportunities for Dow Jones and Aeluma

0.1
  Correlation Coefficient

Average diversification

The 3 months correlation between Dow and Aeluma is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Aeluma Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeluma Inc 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 Aeluma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeluma Inc has no effect on the direction of Dow Jones i.e., Dow Jones and Aeluma go up and down completely randomly.
    Optimize

Pair Corralation between Dow Jones and Aeluma

Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the Aeluma. But the index apears to be less risky and, when comparing its historical volatility, Dow Jones Industrial is 22.18 times less risky than Aeluma. The index trades about -0.21 of its potential returns per unit of risk. The Aeluma Inc is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  355.00  in Aeluma Inc on September 23, 2024 and sell it today you would earn a total of  495.00  from holding Aeluma Inc or generate 139.44% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Dow Jones Industrial  vs.  Aeluma Inc

 Performance 
       Timeline  

Dow Jones and Aeluma Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dow Jones and Aeluma

The main advantage of trading using opposite Dow Jones and Aeluma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Aeluma 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 Aeluma will offset losses from the drop in Aeluma's long position.
The idea behind Dow Jones Industrial and Aeluma Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

Other Complementary Tools

Content Syndication
Quickly integrate customizable finance content to your own investment portal
Stock Screener
Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook.
AI Portfolio Architect
Use AI to generate optimal portfolios and find profitable investment opportunities
Commodity Directory
Find actively traded commodities issued by global exchanges
Equity Valuation
Check real value of public entities based on technical and fundamental data