Correlation Between PHN Canadian and Dow Jones
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By analyzing existing cross correlation between PHN Canadian Equity and Dow Jones Industrial, you can compare the effects of market volatilities on PHN Canadian 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 PHN Canadian with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of PHN Canadian and Dow Jones.
Diversification Opportunities for PHN Canadian and Dow Jones
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PHN and Dow is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding PHN Canadian Equity 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 PHN Canadian 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 PHN Canadian Equity 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 PHN Canadian i.e., PHN Canadian and Dow Jones go up and down completely randomly.
Pair Corralation between PHN Canadian and Dow Jones
Assuming the 90 days trading horizon PHN Canadian is expected to generate 1.32 times less return on investment than Dow Jones. In addition to that, PHN Canadian is 1.01 times more volatile than Dow Jones Industrial. It trades about 0.08 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.11 per unit of volatility. If you would invest 3,361,869 in Dow Jones Industrial on August 30, 2024 and sell it today you would earn a total of 1,110,337 from holding Dow Jones Industrial or generate 33.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.49% |
| Values | Daily Returns |
PHN Canadian Equity vs. Dow Jones Industrial
Performance |
| Timeline |
PHN Canadian and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
PHN Canadian Equity
Pair trading matchups for PHN Canadian
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with PHN Canadian and Dow Jones
The main advantage of trading using opposite PHN Canadian and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PHN Canadian 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.| PHN Canadian vs. Mawer Canadien actions | PHN Canadian vs. RBC Canadian Equity | PHN Canadian vs. BMO Aggregate Bond | PHN Canadian vs. iShares Canadian HYBrid |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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