Correlation Between Advanced Lithium and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Advanced Lithium 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 Advanced Lithium and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Lithium Electrochemistry and Dow Jones Industrial, you can compare the effects of market volatilities on Advanced Lithium 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 Advanced Lithium with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Lithium and Dow Jones.
Diversification Opportunities for Advanced Lithium and Dow Jones
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Advanced and Dow is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Lithium Electrochemis 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 Advanced Lithium 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 Advanced Lithium Electrochemistry 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 Advanced Lithium i.e., Advanced Lithium and Dow Jones go up and down completely randomly.
Pair Corralation between Advanced Lithium and Dow Jones
Assuming the 90 days trading horizon Advanced Lithium Electrochemistry is expected to generate 5.42 times more return on investment than Dow Jones. However, Advanced Lithium is 5.42 times more volatile than Dow Jones Industrial. It trades about 0.08 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.16 per unit of risk. If you would invest 3,418 in Advanced Lithium Electrochemistry on September 12, 2024 and sell it today you would earn a total of 532.00 from holding Advanced Lithium Electrochemistry or generate 15.56% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.44% |
Values | Daily Returns |
Advanced Lithium Electrochemis vs. Dow Jones Industrial
Performance |
Timeline |
Advanced Lithium and Dow Jones Volatility Contrast
Predicted Return Density |
Returns |
Advanced Lithium Electrochemistry
Pair trading matchups for Advanced Lithium
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Advanced Lithium and Dow Jones
The main advantage of trading using opposite Advanced Lithium and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Lithium 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.Advanced Lithium vs. Voltronic Power Technology | Advanced Lithium vs. Advanced Energy Solution | Advanced Lithium vs. Simplo Technology Co | Advanced Lithium vs. Amtran Technology Co |
Dow Jones vs. ChampionX | Dow Jones vs. Highway Holdings Limited | Dow Jones vs. Westinghouse Air Brake | Dow Jones vs. Cementos Pacasmayo SAA |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
Money Managers Screen money managers from public funds and ETFs managed around the world |