Correlation Between DOW and Immunoprecise Antibodies

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Can any of the company-specific risk be diversified away by investing in both DOW and Immunoprecise Antibodies 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 and Immunoprecise Antibodies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DOW and Immunoprecise Antibodies, you can compare the effects of market volatilities on DOW and Immunoprecise Antibodies 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 Immunoprecise Antibodies. Check out your portfolio center. Please also check ongoing floating volatility patterns of DOW and Immunoprecise Antibodies.

Diversification Opportunities for DOW and Immunoprecise Antibodies

0.81
  Correlation Coefficient

Very poor diversification

The 3 months correlation between DOW and Immunoprecise is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding DOW and Immunoprecise Antibodies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Immunoprecise Antibodies 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 Immunoprecise Antibodies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Immunoprecise Antibodies has no effect on the direction of DOW i.e., DOW and Immunoprecise Antibodies go up and down completely randomly.
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Pair Corralation between DOW and Immunoprecise Antibodies

Given the investment horizon of 90 days DOW is expected to generate 0.29 times more return on investment than Immunoprecise Antibodies. However, DOW is 3.42 times less risky than Immunoprecise Antibodies. It trades about -0.1 of its potential returns per unit of risk. Immunoprecise Antibodies is currently generating about -0.06 per unit of risk. If you would invest  3,679,965  in DOW on April 4, 2022 and sell it today you would lose (570,239)  from holding DOW or give up 15.5% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

DOW  vs.  Immunoprecise Antibodies

 Performance (%) 
      Timeline 

DOW and Immunoprecise Antibodies Volatility Contrast

 Predicted Return Density 
      Returns 

DOW

Pair trading matchups for DOW

Liquidia Corp vs. DOW
Calyxt vs. DOW
Cyclacel Pharmaceuti vs. DOW
GLAXOSMITHKLINE PLC vs. DOW
Visa vs. DOW
Sentinelone Inc vs. DOW
Alphabet vs. DOW
BP PLC vs. DOW
Vmware vs. DOW
RENEWI PLC vs. DOW
Seneca Foods vs. DOW
Novan 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.

Immunoprecise Antibodies

Pair trading matchups for Immunoprecise Antibodies

Pair Trading with DOW and Immunoprecise Antibodies

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

DOW

Pair trading matchups for DOW

MITIE GROUP vs. DOW
Sentinelone Inc vs. DOW
GLAXOSMITHKLINE PLC vs. DOW
Vmware vs. DOW
Visa vs. DOW
BP PLC vs. DOW
Alzamend Neuro vs. DOW
Liquidia Corp vs. DOW
Novan vs. DOW
ATT vs. DOW
RENEWI PLC 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.
The idea behind DOW and Immunoprecise Antibodies 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.

Immunoprecise Antibodies

Pair trading matchups for Immunoprecise Antibodies

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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