Correlation Between AC MOORE and DOW

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

Diversification Opportunities for AC MOORE and DOW

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between ACMR1 and DOW is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding AC MOORE ARTS and DOW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DOW and AC MOORE 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 AC MOORE ARTS 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 AC MOORE i.e., AC MOORE and DOW go up and down completely randomly.
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Pair Corralation between AC MOORE and DOW

If you would invest  2,833,192  in DOW on May 18, 2022 and sell it today you would earn a total of  582,009  from holding DOW or generate 20.54% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

AC MOORE ARTS  vs.  DOW

 Performance (%) 
       Timeline  

AC MOORE and DOW Volatility Contrast

   Predicted Return Density   
       Returns  

DOW

Pair trading matchups for DOW

Microsoft Corp vs. DOW
Costco Wholesale vs. DOW
Nvidia Corp vs. DOW
Abbott Laboratories vs. DOW
McDonalds Corp 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 AC MOORE and DOW

The main advantage of trading using opposite AC MOORE and DOW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AC MOORE 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 AC MOORE ARTS 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

Microsoft Corp vs. DOW
Abbott Laboratories vs. DOW
Nvidia Corp vs. DOW
McDonalds Corp vs. DOW
Abeona Therapeutics vs. DOW
Costco Wholesale 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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