Correlation Between 40414LAM1 and Dow Jones
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By analyzing existing cross correlation between HCP INC 34 and Dow Jones Industrial, you can compare the effects of market volatilities on 40414LAM1 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 40414LAM1 with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of 40414LAM1 and Dow Jones.
Diversification Opportunities for 40414LAM1 and Dow Jones
Very good diversification
The 3 months correlation between 40414LAM1 and Dow is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding HCP INC 34 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 40414LAM1 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 HCP INC 34 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 40414LAM1 i.e., 40414LAM1 and Dow Jones go up and down completely randomly.
Pair Corralation between 40414LAM1 and Dow Jones
Assuming the 90 days trading horizon HCP INC 34 is expected to under-perform the Dow Jones. But the bond apears to be less risky and, when comparing its historical volatility, HCP INC 34 is 1.13 times less risky than Dow Jones. The bond trades about -0.06 of its potential returns per unit of risk. The Dow Jones Industrial is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 4,082,959 in Dow Jones Industrial on September 7, 2024 and sell it today you would earn a total of 393,612 from holding Dow Jones Industrial or generate 9.64% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 92.06% |
Values | Daily Returns |
HCP INC 34 vs. Dow Jones Industrial
Performance |
Timeline |
40414LAM1 and Dow Jones Volatility Contrast
Predicted Return Density |
Returns |
HCP INC 34
Pair trading matchups for 40414LAM1
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with 40414LAM1 and Dow Jones
The main advantage of trading using opposite 40414LAM1 and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 40414LAM1 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.40414LAM1 vs. Alvotech | 40414LAM1 vs. Sonida Senior Living | 40414LAM1 vs. Valneva SE ADR | 40414LAM1 vs. Neogen |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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