Correlation Between Great Basin and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Great Basin 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 Great Basin and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Basin Energies and Dow Jones Industrial, you can compare the effects of market volatilities on Great Basin 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 Great Basin with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Basin and Dow Jones.
Diversification Opportunities for Great Basin and Dow Jones
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Great and Dow is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Great Basin Energies 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 Great Basin 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 Great Basin Energies 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 Great Basin i.e., Great Basin and Dow Jones go up and down completely randomly.
Pair Corralation between Great Basin and Dow Jones
Given the investment horizon of 90 days Great Basin Energies is expected to generate 7.27 times more return on investment than Dow Jones. However, Great Basin is 7.27 times more volatile than Dow Jones Industrial. It trades about 0.1 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.14 per unit of risk. If you would invest 3.00 in Great Basin Energies on July 19, 2024 and sell it today you would earn a total of 2.01 from holding Great Basin Energies or generate 67.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Great Basin Energies vs. Dow Jones Industrial
Performance |
Timeline |
Great Basin and Dow Jones Volatility Contrast
Predicted Return Density |
Returns |
Great Basin Energies
Pair trading matchups for Great Basin
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Great Basin and Dow Jones
The main advantage of trading using opposite Great Basin and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Basin 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.Great Basin vs. FormFactor | Great Basin vs. KLA Tencor | Great Basin vs. Coinbase Global | Great Basin vs. Q2 Holdings |
Dow Jones vs. Cosan SA ADR | Dow Jones vs. Yoshitsu Co Ltd | Dow Jones vs. Upper Street Marketing | Dow Jones vs. Baozun 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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