Correlation Between Dow Jones and Aris Mining
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Aris Mining 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 Aris Mining 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 Aris Mining, you can compare the effects of market volatilities on Dow Jones and Aris Mining 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 Aris Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Aris Mining.
Diversification Opportunities for Dow Jones and Aris Mining
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dow and Aris is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Aris Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aris Mining 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 Aris Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aris Mining has no effect on the direction of Dow Jones i.e., Dow Jones and Aris Mining go up and down completely randomly.
Pair Corralation between Dow Jones and Aris Mining
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the Aris Mining. But the index apears to be less risky and, when comparing its historical volatility, Dow Jones Industrial is 3.85 times less risky than Aris Mining. The index trades about -0.09 of its potential returns per unit of risk. The Aris Mining is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 373.00 in Aris Mining on December 4, 2024 and sell it today you would lose (4.00) from holding Aris Mining or give up 1.07% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 98.33% |
Values | Daily Returns |
Dow Jones Industrial vs. Aris Mining
Performance |
Timeline |
Dow Jones and Aris Mining Volatility Contrast
Predicted Return Density |
Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Aris Mining
Pair trading matchups for Aris Mining
Pair Trading with Dow Jones and Aris Mining
The main advantage of trading using opposite Dow Jones and Aris Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Aris Mining 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 Aris Mining will offset losses from the drop in Aris Mining's long position.Dow Jones vs. Balchem | Dow Jones vs. Merit Medical Systems | Dow Jones vs. American Vanguard | Dow Jones vs. Regeneron Pharmaceuticals |
Aris Mining vs. Zijin Mining Group | Aris Mining vs. Chester Mining | Aris Mining vs. Axalta Coating Systems | Aris Mining vs. Luxfer Holdings PLC |
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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