Correlation Between LG Gerd and Dow Jones

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

Diversification Opportunities for LG Gerd and Dow Jones

0.88
  Correlation Coefficient

Very poor diversification

The 3 months correlation between GERD and Dow is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding LG Gerd Kommer 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 LG Gerd 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 LG Gerd Kommer 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 LG Gerd i.e., LG Gerd and Dow Jones go up and down completely randomly.
    Optimize

Pair Corralation between LG Gerd and Dow Jones

Assuming the 90 days trading horizon LG Gerd Kommer is expected to generate 0.85 times more return on investment than Dow Jones. However, LG Gerd Kommer is 1.17 times less risky than Dow Jones. It trades about 0.14 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.04 per unit of risk. If you would invest  1,116  in LG Gerd Kommer on September 23, 2024 and sell it today you would earn a total of  70.00  from holding LG Gerd Kommer or generate 6.27% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy98.48%
ValuesDaily Returns

LG Gerd Kommer  vs.  Dow Jones Industrial

 Performance 
       Timeline  

LG Gerd and Dow Jones Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with LG Gerd and Dow Jones

The main advantage of trading using opposite LG Gerd and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Gerd 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.
The idea behind LG Gerd Kommer and Dow Jones Industrial 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.

Other Complementary Tools

Bond Analysis
Evaluate and analyze corporate bonds as a potential investment for your portfolios.
FinTech Suite
Use AI to screen and filter profitable investment opportunities
Bollinger Bands
Use Bollinger Bands indicator to analyze target price for a given investing horizon
Economic Indicators
Top statistical indicators that provide insights into how an economy is performing
Price Ceiling Movement
Calculate and plot Price Ceiling Movement for different equity instruments