Correlation Between Arthur J and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Arthur J 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 Arthur J and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arthur J Gallagher and Dow Jones Industrial, you can compare the effects of market volatilities on Arthur J 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 Arthur J with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arthur J and Dow Jones.
Diversification Opportunities for Arthur J and Dow Jones
Poor diversification
The 3 months correlation between Arthur and Dow is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Arthur J Gallagher 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 Arthur J 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 Arthur J Gallagher 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 Arthur J i.e., Arthur J and Dow Jones go up and down completely randomly.
Pair Corralation between Arthur J and Dow Jones
Assuming the 90 days horizon Arthur J Gallagher is expected to generate 1.67 times more return on investment than Dow Jones. However, Arthur J is 1.67 times more volatile than Dow Jones Industrial. It trades about 0.12 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.19 per unit of risk. If you would invest 27,430 in Arthur J Gallagher on October 16, 2024 and sell it today you would earn a total of 740.00 from holding Arthur J Gallagher or generate 2.7% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 84.21% |
Values | Daily Returns |
Arthur J Gallagher vs. Dow Jones Industrial
Performance |
Timeline |
Arthur J and Dow Jones Volatility Contrast
Predicted Return Density |
Returns |
Arthur J Gallagher
Pair trading matchups for Arthur J
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Arthur J and Dow Jones
The main advantage of trading using opposite Arthur J and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arthur J 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.Arthur J vs. ARISTOCRAT LEISURE | Arthur J vs. Singapore Airlines Limited | Arthur J vs. SINGAPORE AIRLINES | Arthur J vs. ePlay Digital |
Dow Jones vs. LB Foster | Dow Jones vs. Definitive Healthcare Corp | Dow Jones vs. TFI International | Dow Jones vs. Ryanair 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
FinTech Suite Use AI to screen and filter profitable investment opportunities | |
Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |