Correlation Between Dow Jones and Bleuacacia

Can any of the company-specific risk be diversified away by investing in both Dow Jones and Bleuacacia 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 Bleuacacia 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 bleuacacia ltd Warrants, you can compare the effects of market volatilities on Dow Jones and Bleuacacia 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 Bleuacacia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Bleuacacia.

Diversification Opportunities for Dow Jones and Bleuacacia

-0.37

Correlation Coefficient

Dow Jones  Bleuacacia

Very good diversification

The 3 months correlation between Dow and Bleuacacia is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and bleuacacia ltd Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on bleuacacia ltd Warrants 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 Bleuacacia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of bleuacacia ltd Warrants has no effect on the direction of Dow Jones i.e., Dow Jones and Bleuacacia go up and down completely randomly.

Pair Corralation between Dow Jones and Bleuacacia

Assuming the 90 days trading horizon Dow Jones is expected to generate 316.96 times less return on investment than Bleuacacia. But when comparing it to its historical volatility, Dow Jones Industrial is 224.39 times less risky than Bleuacacia. It trades about 0.11 of its potential returns per unit of risk. bleuacacia ltd Warrants is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1.80  in bleuacacia ltd Warrants on September 16, 2024 and sell it today you would lose (0.83) from holding bleuacacia ltd Warrants or give up 46.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	46.15%
Values	Daily Returns

Dow Jones Industrial  vs.  bleuacacia ltd Warrants

Pair Trading with Dow Jones and Bleuacacia

The main advantage of trading using opposite Dow Jones and Bleuacacia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Bleuacacia 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 Bleuacacia will offset losses from the drop in Bleuacacia's long position.

The idea behind Dow Jones Industrial and bleuacacia ltd Warrants pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.