This module allows you to analyze existing cross correlation between DOW and Alphabet. You can compare the effects of market volatilities on DOW and Alphabet 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 Alphabet. See also your portfolio center. Please also check ongoing floating volatility patterns of DOW and Alphabet.
Overlapping area represents the amount of risk that can be diversified away by holding DOW and Alphabet Inc in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Alphabet 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 Alphabet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphabet has no effect on the direction of DOW i.e. DOW and Alphabet go up and down completely randomly.
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