Correlation Between Dow Jones and Proto Labs
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Proto Labs 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 Proto Labs 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 Proto Labs, you can compare the effects of market volatilities on Dow Jones and Proto Labs 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 Proto Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Proto Labs.
Diversification Opportunities for Dow Jones and Proto Labs
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dow and Proto is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Proto Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Proto Labs 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 Proto Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Proto Labs has no effect on the direction of Dow Jones i.e., Dow Jones and Proto Labs go up and down completely randomly.
Pair Corralation between Dow Jones and Proto Labs
Assuming the 90 days trading horizon Dow Jones is expected to generate 2.0 times less return on investment than Proto Labs. But when comparing it to its historical volatility, Dow Jones Industrial is 2.76 times less risky than Proto Labs. It trades about 0.12 of its potential returns per unit of risk. Proto Labs is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,904 in Proto Labs on May 5, 2025 and sell it today you would earn a total of 415.00 from holding Proto Labs or generate 10.63% 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. Proto Labs
Performance |
Timeline |
Dow Jones and Proto Labs Volatility Contrast
Predicted Return Density |
Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Proto Labs
Pair trading matchups for Proto Labs
Pair Trading with Dow Jones and Proto Labs
The main advantage of trading using opposite Dow Jones and Proto Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Proto Labs 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 Proto Labs will offset losses from the drop in Proto Labs' long position.Dow Jones vs. CF Industries Holdings | Dow Jones vs. Hillman Solutions Corp | Dow Jones vs. Ecovyst | Dow Jones vs. Timken Company |
Proto Labs vs. Mayville Engineering Co | Proto Labs vs. Insteel Industries | Proto Labs vs. Ryerson Holding Corp | Proto Labs vs. Allegheny Technologies Incorporated |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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