Correlation Between IOI Bhd and Dow Jones
Can any of the company-specific risk be diversified away by investing in both IOI Bhd 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 IOI Bhd and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IOI Bhd and Dow Jones Industrial, you can compare the effects of market volatilities on IOI Bhd 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 IOI Bhd with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of IOI Bhd and Dow Jones.
Diversification Opportunities for IOI Bhd and Dow Jones
Average diversification
The 3 months correlation between IOI and Dow is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding IOI Bhd 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 IOI Bhd 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 IOI Bhd 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 IOI Bhd i.e., IOI Bhd and Dow Jones go up and down completely randomly.
Pair Corralation between IOI Bhd and Dow Jones
Assuming the 90 days trading horizon IOI Bhd is expected to generate 22.74 times less return on investment than Dow Jones. In addition to that, IOI Bhd is 1.38 times more volatile than Dow Jones Industrial. It trades about 0.01 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.16 per unit of volatility. If you would invest 3,857,103 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 633,962 from holding Dow Jones Industrial or generate 16.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.43% |
| Values | Daily Returns |
IOI Bhd vs. Dow Jones Industrial
Performance |
| Timeline |
IOI Bhd and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
IOI Bhd
Pair trading matchups for IOI Bhd
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with IOI Bhd and Dow Jones
The main advantage of trading using opposite IOI Bhd and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IOI Bhd 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.| IOI Bhd vs. Nestle Bhd | IOI Bhd vs. FGV Holdings Bhd | IOI Bhd vs. British American Tobacco | IOI Bhd vs. FARM FRESH BERHAD |
| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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