Correlation Between POWR Lithium and Dow Jones
Can any of the company-specific risk be diversified away by investing in both POWR 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 POWR 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 POWR Lithium Corp and Dow Jones Industrial, you can compare the effects of market volatilities on POWR 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 POWR Lithium with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of POWR Lithium and Dow Jones.
Diversification Opportunities for POWR Lithium and Dow Jones
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between POWR and Dow is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding POWR Lithium Corp 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 POWR 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 POWR Lithium Corp 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 POWR Lithium i.e., POWR Lithium and Dow Jones go up and down completely randomly.
Pair Corralation between POWR Lithium and Dow Jones
Assuming the 90 days horizon POWR Lithium Corp is expected to generate 86.72 times more return on investment than Dow Jones. However, POWR Lithium is 86.72 times more volatile than Dow Jones Industrial. It trades about 0.14 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.2 per unit of risk. If you would invest 4.10 in POWR Lithium Corp on September 7, 2024 and sell it today you would earn a total of 1.80 from holding POWR Lithium Corp or generate 43.9% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 98.44% |
Values | Daily Returns |
POWR Lithium Corp vs. Dow Jones Industrial
Performance |
Timeline |
POWR Lithium and Dow Jones Volatility Contrast
Predicted Return Density |
Returns |
POWR Lithium Corp
Pair trading matchups for POWR Lithium
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with POWR Lithium and Dow Jones
The main advantage of trading using opposite POWR Lithium and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POWR 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.POWR Lithium vs. Chemours Co | POWR Lithium vs. Sensient Technologies | POWR Lithium vs. Ryanair Holdings PLC | POWR Lithium vs. Air Transport Services |
Dow Jones vs. NI Holdings | Dow Jones vs. GMS Inc | Dow Jones vs. QBE Insurance Group | Dow Jones vs. Direct Line Insurance |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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