Correlation Between Dow Jones and Invesco AT1
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Invesco AT1 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 Invesco AT1 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 Invesco AT1 Capital, you can compare the effects of market volatilities on Dow Jones and Invesco AT1 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 Invesco AT1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Invesco AT1.
Diversification Opportunities for Dow Jones and Invesco AT1
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Invesco is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Invesco AT1 Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco AT1 Capital 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 Invesco AT1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco AT1 Capital has no effect on the direction of Dow Jones i.e., Dow Jones and Invesco AT1 go up and down completely randomly.
Pair Corralation between Dow Jones and Invesco AT1
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 3.23 times more return on investment than Invesco AT1. However, Dow Jones is 3.23 times more volatile than Invesco AT1 Capital. It trades about 0.03 of its potential returns per unit of risk. Invesco AT1 Capital is currently generating about 0.02 per unit of risk. If you would invest 4,293,160 in Dow Jones Industrial on October 21, 2024 and sell it today you would earn a total of 55,623 from holding Dow Jones Industrial or generate 1.3% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.24% |
Values | Daily Returns |
Dow Jones Industrial vs. Invesco AT1 Capital
Performance |
Timeline |
Dow Jones and Invesco AT1 Volatility Contrast
Predicted Return Density |
Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Invesco AT1 Capital
Pair trading matchups for Invesco AT1
Pair Trading with Dow Jones and Invesco AT1
The main advantage of trading using opposite Dow Jones and Invesco AT1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Invesco AT1 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 Invesco AT1 will offset losses from the drop in Invesco AT1's long position.Dow Jones vs. Ainsworth Game Technology | ||
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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 Positions Ratings module to 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.
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