Correlation Between Custodian BCI and Dow Jones
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By analyzing existing cross correlation between Custodian BCI Balanced and Dow Jones Industrial, you can compare the effects of market volatilities on Custodian BCI 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 Custodian BCI with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Custodian BCI and Dow Jones.
Diversification Opportunities for Custodian BCI and Dow Jones
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Custodian and Dow is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Custodian BCI Balanced 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 Custodian BCI 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 Custodian BCI Balanced 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 Custodian BCI i.e., Custodian BCI and Dow Jones go up and down completely randomly.
Pair Corralation between Custodian BCI and Dow Jones
Assuming the 90 days trading horizon Custodian BCI is expected to generate 1.6 times less return on investment than Dow Jones. But when comparing it to its historical volatility, Custodian BCI Balanced is 1.39 times less risky than Dow Jones. It trades about 0.07 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,396,635 in Dow Jones Industrial on September 4, 2024 and sell it today you would earn a total of 1,081,565 from holding Dow Jones Industrial or generate 31.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.59% |
| Values | Daily Returns |
Custodian BCI Balanced vs. Dow Jones Industrial
Performance |
| Timeline |
Custodian BCI and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Custodian BCI Balanced
Pair trading matchups for Custodian BCI
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Custodian BCI and Dow Jones
The main advantage of trading using opposite Custodian BCI and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Custodian BCI 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.| Custodian BCI vs. Sasol Ltd Bee | Custodian BCI vs. Centaur Bci Balanced | Custodian BCI vs. Sabvest Capital | Custodian BCI vs. Growthpoint Properties |
| Dow Jones vs. Gentex | Dow Jones vs. American Axle Manufacturing | Dow Jones vs. Pearson PLC ADR | Dow Jones vs. Marine Products |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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