Correlation Between I-Components and Dow Jones
Can any of the company-specific risk be diversified away by investing in both I-Components and Dow Jones 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 I-Components and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between i Components Co and Dow Jones Industrial, you can compare the effects of market volatilities on I-Components and Dow Jones 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 I-Components with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of I-Components and Dow Jones.
Diversification Opportunities for I-Components and Dow Jones
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between I-Components and Dow is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding i Components Co and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and I-Components 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 i Components Co are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of I-Components i.e., I-Components and Dow Jones go up and down completely randomly.
Pair Corralation between I-Components and Dow Jones
Assuming the 90 days trading horizon i Components Co is expected to generate 0.95 times more return on investment than Dow Jones. However, i Components Co is 1.05 times less risky than Dow Jones. It trades about 0.15 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.21 per unit of risk. If you would invest 460,000 in i Components Co on September 26, 2024 and sell it today you would earn a total of 10,500 from holding i Components Co or generate 2.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
i Components Co vs. Dow Jones Industrial
Performance |
| Timeline |
I-Components and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
i Components Co
Pair trading matchups for I-Components
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with I-Components and Dow Jones
The main advantage of trading using opposite I-Components and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if I-Components position performs unexpectedly, Dow Jones 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 Jones will offset losses from the drop in Dow Jones' long position.| I-Components vs. Samsung Electronics Co | I-Components vs. Samsung Electronics Co | I-Components vs. LG Energy Solution | I-Components vs. SK Hynix |
| Dow Jones vs. Sabre Corpo | Dow Jones vs. Cannae Holdings | Dow Jones vs. Pekin Life Insurance | Dow Jones vs. Supercom |
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 the Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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