Correlation Between Dividend and Dividend Growth
Can any of the company-specific risk be diversified away by investing in both Dividend and Dividend Growth 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 Dividend and Dividend Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dividend 15 Split and Dividend Growth Split, you can compare the effects of market volatilities on Dividend and Dividend Growth 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 Dividend with a short position of Dividend Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dividend and Dividend Growth.
Diversification Opportunities for Dividend and Dividend Growth
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dividend and Dividend is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Dividend 15 Split and Dividend Growth Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dividend Growth Split and Dividend 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 Dividend 15 Split are associated (or correlated) with Dividend Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dividend Growth Split has no effect on the direction of Dividend i.e., Dividend and Dividend Growth go up and down completely randomly.
Pair Corralation between Dividend and Dividend Growth
Assuming the 90 days trading horizon Dividend 15 Split is expected to generate 0.88 times more return on investment than Dividend Growth. However, Dividend 15 Split is 1.14 times less risky than Dividend Growth. It trades about 0.37 of its potential returns per unit of risk. Dividend Growth Split is currently generating about 0.27 per unit of risk. If you would invest 618.00 in Dividend 15 Split on July 20, 2025 and sell it today you would earn a total of 67.00 from holding Dividend 15 Split or generate 10.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dividend 15 Split vs. Dividend Growth Split
Performance |
| Timeline |
| Dividend 15 Split |
| Dividend Growth Split |
Dividend and Dividend Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dividend and Dividend Growth
The main advantage of trading using opposite Dividend and Dividend Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dividend position performs unexpectedly, Dividend Growth 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 Dividend Growth will offset losses from the drop in Dividend Growth's long position.| Dividend vs. Financial 15 Split | Dividend vs. North American Financial | Dividend vs. Dividend Growth Split | Dividend vs. Life Banc Split |
| Dividend Growth vs. Life Banc Split | Dividend Growth vs. North American Financial | Dividend Growth vs. Financial 15 Split | Dividend Growth vs. Dividend 15 Split |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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