This module allows you to analyze existing cross correlation between DOW and CA. You can compare the effects of market volatilities on DOW and CA 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 with a short position of CA. See also your portfolio center. Please also check ongoing floating volatility patterns of DOW and CA.
Given the investment horizon of 30 days, DOW is expected to generate 2.85 times more return on investment than CA. However, DOW is 2.85 times more volatile than CA. It trades about 0.32 of its potential returns per unit of risk. CA is currently generating about 0.35 per unit of risk. If you would invest 2,573,360 in DOW on August 22, 2018 and sell it today you would earn a total of 67,216 from holding DOW or generate 2.61% return on investment over 30 days.
Overlapping area represents the amount of risk that can be diversified away by holding DOW and CA in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on CA and DOW 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 are associated (or correlated) with CA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CA has no effect on the direction of DOW i.e. DOW and CA go up and down completely randomly.
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See also your portfolio center. Please also try Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.