Correlation Between Dow Jones and Generation Bio
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Generation Bio 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 Generation Bio 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 Generation Bio Co, you can compare the effects of market volatilities on Dow Jones and Generation Bio 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 Generation Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Generation Bio.
Diversification Opportunities for Dow Jones and Generation Bio
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dow and Generation is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Generation Bio Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generation Bio 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 Generation Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generation Bio has no effect on the direction of Dow Jones i.e., Dow Jones and Generation Bio go up and down completely randomly.
Pair Corralation between Dow Jones and Generation Bio
Assuming the 90 days trading horizon Dow Jones is expected to generate 3.5 times less return on investment than Generation Bio. But when comparing it to its historical volatility, Dow Jones Industrial is 9.66 times less risky than Generation Bio. It trades about 0.12 of its potential returns per unit of risk. Generation Bio Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 409.00 in Generation Bio Co on May 5, 2025 and sell it today you would earn a total of 12.00 from holding Generation Bio Co or generate 2.93% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Dow Jones Industrial vs. Generation Bio Co
Performance |
Timeline |
Dow Jones and Generation Bio Volatility Contrast
Predicted Return Density |
Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Generation Bio Co
Pair trading matchups for Generation Bio
Pair Trading with Dow Jones and Generation Bio
The main advantage of trading using opposite Dow Jones and Generation Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Generation Bio 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 Generation Bio will offset losses from the drop in Generation Bio's long position.Dow Jones vs. CF Industries Holdings | Dow Jones vs. Hillman Solutions Corp | Dow Jones vs. Ecovyst | Dow Jones vs. Timken Company |
Generation Bio vs. Century Therapeutics | Generation Bio vs. Kezar Life Sciences | Generation Bio vs. Mineralys Therapeutics, Common | Generation Bio vs. Nkarta Inc |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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