Correlation Between Dow Jones and AMG Advanced
Can any of the company-specific risk be diversified away by investing in both Dow Jones and AMG Advanced 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 AMG Advanced 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 AMG Advanced Metallurgical, you can compare the effects of market volatilities on Dow Jones and AMG Advanced 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 AMG Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and AMG Advanced.
Diversification Opportunities for Dow Jones and AMG Advanced
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dow and AMG is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and AMG Advanced Metallurgical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMG Advanced Metallu 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 AMG Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMG Advanced Metallu has no effect on the direction of Dow Jones i.e., Dow Jones and AMG Advanced go up and down completely randomly.
Pair Corralation between Dow Jones and AMG Advanced
Assuming the 90 days trading horizon Dow Jones is expected to generate 5.28 times less return on investment than AMG Advanced. But when comparing it to its historical volatility, Dow Jones Industrial is 4.15 times less risky than AMG Advanced. It trades about 0.23 of its potential returns per unit of risk. AMG Advanced Metallurgical is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 1,543 in AMG Advanced Metallurgical on April 24, 2025 and sell it today you would earn a total of 1,123 from holding AMG Advanced Metallurgical or generate 72.78% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 96.83% |
Values | Daily Returns |
Dow Jones Industrial vs. AMG Advanced Metallurgical
Performance |
Timeline |
Dow Jones and AMG Advanced Volatility Contrast
Predicted Return Density |
Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
AMG Advanced Metallurgical
Pair trading matchups for AMG Advanced
Pair Trading with Dow Jones and AMG Advanced
The main advantage of trading using opposite Dow Jones and AMG Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, AMG Advanced 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 AMG Advanced will offset losses from the drop in AMG Advanced's long position.Dow Jones vs. Stereo Vision Entertainment | Dow Jones vs. Triton International Limited | Dow Jones vs. Loandepot | Dow Jones vs. Sonos Inc |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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