Correlation Between Dow Jones and HT
Can any of the company-specific risk be diversified away by investing in both Dow Jones and HT 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 HT 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 HT, you can compare the effects of market volatilities on Dow Jones and HT 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 HT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and HT.
Diversification Opportunities for Dow Jones and HT
Weak diversification
The 3 months correlation between Dow and HT is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and HT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HT 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 HT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HT has no effect on the direction of Dow Jones i.e., Dow Jones and HT go up and down completely randomly.
Pair Corralation between Dow Jones and HT
Assuming the 90 days trading horizon Dow Jones is expected to generate 32.96 times less return on investment than HT. But when comparing it to its historical volatility, Dow Jones Industrial is 58.37 times less risky than HT. It trades about 0.18 of its potential returns per unit of risk. HT is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 23.00 in HT on May 30, 2025 and sell it today you would earn a total of 28.00 from holding HT or generate 121.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Dow Jones Industrial vs. HT
Performance |
| Timeline |
Dow Jones and HT Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
HT
Pair trading matchups for HT
Pair Trading with Dow Jones and HT
The main advantage of trading using opposite Dow Jones and HT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, HT 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 HT will offset losses from the drop in HT's long position.| Dow Jones vs. City Office REIT | Dow Jones vs. KNOT Offshore Partners | Dow Jones vs. Getty Copper | Dow Jones vs. Titan America SA |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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