Correlation Between Dow Jones and Southside Bancshares,

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

Diversification Opportunities for Dow Jones and Southside Bancshares,

0.74

Correlation Coefficient

Dow Jones  Southside Bancshares,

Poor diversification

The 3 months correlation between Dow and Southside is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Southside Bancshares, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southside Bancshares, 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 Southside Bancshares,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southside Bancshares, has no effect on the direction of Dow Jones i.e., Dow Jones and Southside Bancshares, go up and down completely randomly.

Pair Corralation between Dow Jones and Southside Bancshares,

Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.44 times more return on investment than Southside Bancshares,. However, Dow Jones Industrial is 2.25 times less risky than Southside Bancshares,. It trades about -0.2 of its potential returns per unit of risk. Southside Bancshares, is currently generating about -0.25 per unit of risk. If you would invest  4,472,206  in Dow Jones Industrial on September 28, 2024 and sell it today you would lose (139,626) from holding Dow Jones Industrial or give up 3.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Dow Jones Industrial  vs.  Southside Bancshares,

Pair Trading with Dow Jones and Southside Bancshares,

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

The idea behind Dow Jones Industrial and Southside Bancshares, 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.