Correlation Between Super Micro and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Super Micro 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 Super Micro and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Super Micro Computer and Dow Jones Industrial, you can compare the effects of market volatilities on Super Micro 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 Super Micro with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Super Micro and Dow Jones.
Diversification Opportunities for Super Micro and Dow Jones
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Super and Dow is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Super Micro Computer 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 Super Micro 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 Super Micro Computer 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 Super Micro i.e., Super Micro and Dow Jones go up and down completely randomly.
Pair Corralation between Super Micro and Dow Jones
Given the investment horizon of 90 days Super Micro Computer is expected to generate 3.34 times more return on investment than Dow Jones. However, Super Micro is 3.34 times more volatile than Dow Jones Industrial. It trades about 0.06 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.01 per unit of risk. If you would invest 3,704 in Super Micro Computer on March 26, 2025 and sell it today you would earn a total of 385.00 from holding Super Micro Computer or generate 10.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Super Micro Computer vs. Dow Jones Industrial
Performance |
| Timeline |
Super Micro and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Super Micro Computer
Pair trading matchups for Super Micro
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Super Micro and Dow Jones
The main advantage of trading using opposite Super Micro and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Super Micro 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.| Super Micro vs. D Wave Quantum | Super Micro vs. Rigetti Computing | Super Micro vs. Cricut Inc | Super Micro vs. Quantum Computing |
| Dow Jones vs. Eldorado Gold Corp | Dow Jones vs. Denison Mines Corp | Dow Jones vs. Weyco Group | Dow Jones vs. Timken Company |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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