Correlation Between Tiger Oil and DOW

By analyzing existing cross correlation between Tiger Oil And and DOW, you can compare the effects of market volatilities on Tiger Oil and DOW 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 Tiger Oil with a short position of DOW. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tiger Oil and DOW.

Specify exactly 2 symbols:

Can any of the company-specific risk be diversified away by investing in both Tiger Oil and DOW 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 Tiger Oil and DOW into the same portfolio, which is an essential part of the fundamental portfolio management process.

Diversification Opportunities for Tiger Oil and DOW

-0.53
  Correlation Coefficient
Tiger Oil And
DOW

Excellent diversification

The 3 months correlation between Tiger and DOW is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Tiger Oil And and DOW in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on DOW and Tiger Oil 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 Tiger Oil And are associated (or correlated) with DOW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DOW has no effect on the direction of Tiger Oil i.e., Tiger Oil and DOW go up and down completely randomly.
    Optimize

Pair Corralation between Tiger Oil and DOW

Given the investment horizon of 90 days Tiger Oil And is expected to generate 87.08 times more return on investment than DOW. However, Tiger Oil is 87.08 times more volatile than DOW. It trades about 0.16 of its potential returns per unit of risk. DOW is currently generating about 0.03 per unit of risk. If you would invest  0.01  in Tiger Oil And on September 8, 2021 and sell it today you would earn a total of  0.02  from holding Tiger Oil And or generate 200.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy99.78%
ValuesDaily Returns

Tiger Oil And  vs.  DOW

 Performance (%) 
      Timeline 

Tiger Oil and DOW Volatility Contrast

 Predicted Return Density 
      Returns 

DOW

Pair trading matchups for DOW

Sentinelone Inc vs. DOW
Vmware vs. DOW
Du Pont vs. DOW
Citigroup vs. DOW
Microsoft Corp vs. DOW
Alphabet vs. DOW
Ford vs. DOW
Salesforce vs. DOW
Visa vs. DOW
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against DOW as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. DOW's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, DOW's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to DOW.

Pair Trading with Tiger Oil and DOW

The main advantage of trading using opposite Tiger Oil and DOW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tiger Oil position performs unexpectedly, DOW 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 will offset losses from the drop in DOW's long position.
The idea behind Tiger Oil And and DOW 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.

DOW

Pair trading matchups for DOW

Sentinelone Inc vs. DOW
Microsoft Corp vs. DOW
Vmware vs. DOW
Ford vs. DOW
Visa vs. DOW
Salesforce vs. DOW
Citigroup vs. DOW
Du Pont vs. DOW
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against DOW as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. DOW's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, DOW's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to DOW.
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

Other Complementary Tools

Idea Optimizer
Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio
Go
Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets
Go
Earnings Calls
Check upcoming earnings announcements updated hourly across public exchanges
Go
Alpha Finder
Use alpha and beta coefficients to find investment opportunities after accounting for the risk
Go
Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios
Go
Premium Stories
Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope
Go
Stock Screener
Find equities using custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook.
Go
Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings
Go