Correlation Between Exela and DOW

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

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

Diversification Opportunities for Exela and DOW

  Correlation Coefficient

Very poor diversification

The 3 months correlation between Exela and DOW is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Exela Technologies Inc and DOW in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on DOW and Exela 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 Exela 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 Exela i.e. Exela and DOW go up and down completely randomly.

Pair Corralation between Exela and DOW

Given the investment horizon of 30 days, Exela is expected to generate 8.81 times more return on investment than DOW. However, Exela is 8.81 times more volatile than DOW. It trades about 0.16 of its potential returns per unit of risk. DOW is currently generating about 0.09 per unit of risk. If you would invest  19.00  in Exela on June 10, 2020 and sell it today you would earn a total of  30.00  from holding Exela or generate 157.89% return on investment over 30 days.
Time Period3 Months [change]
DirectionMoves Together 
ValuesDaily Returns

Exela Technologies Inc  vs.  DOW

 Performance (%) 
 Predicted Return Density 
Check out your portfolio center. Please also try Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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