Correlation Between Santa Cruz and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Santa Cruz 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 Santa Cruz and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Santa Cruz County and Dow Jones Industrial, you can compare the effects of market volatilities on Santa Cruz 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 Santa Cruz with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Santa Cruz and Dow Jones.
Diversification Opportunities for Santa Cruz and Dow Jones
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Santa and Dow is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Santa Cruz County 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 Santa Cruz 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 Santa Cruz County 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 Santa Cruz i.e., Santa Cruz and Dow Jones go up and down completely randomly.
Pair Corralation between Santa Cruz and Dow Jones
Given the investment horizon of 90 days Santa Cruz County is expected to generate 0.73 times more return on investment than Dow Jones. However, Santa Cruz County is 1.37 times less risky than Dow Jones. It trades about -0.01 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 4,135 in Santa Cruz County on December 1, 2024 and sell it today you would lose (13.00) from holding Santa Cruz County or give up 0.31% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.36% |
Values | Daily Returns |
Santa Cruz County vs. Dow Jones Industrial
Performance |
Timeline |
Santa Cruz and Dow Jones Volatility Contrast
Predicted Return Density |
Returns |
Santa Cruz County
Pair trading matchups for Santa Cruz
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Santa Cruz and Dow Jones
The main advantage of trading using opposite Santa Cruz and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Santa Cruz 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.Santa Cruz vs. Harbor Bankshares | Santa Cruz vs. Liberty Northwest Bancorp | Santa Cruz vs. Pioneer Bankcorp | Santa Cruz vs. Summit Bancshares |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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