Correlation Between SPROUTS FARMERS and Dow Jones
Can any of the company-specific risk be diversified away by investing in both SPROUTS FARMERS 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 SPROUTS FARMERS and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPROUTS FARMERS MKT and Dow Jones Industrial, you can compare the effects of market volatilities on SPROUTS FARMERS 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 SPROUTS FARMERS with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPROUTS FARMERS and Dow Jones.
Diversification Opportunities for SPROUTS FARMERS and Dow Jones
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPROUTS and Dow is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding SPROUTS FARMERS MKT 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 SPROUTS FARMERS 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 SPROUTS FARMERS MKT 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 SPROUTS FARMERS i.e., SPROUTS FARMERS and Dow Jones go up and down completely randomly.
Pair Corralation between SPROUTS FARMERS and Dow Jones
Assuming the 90 days trading horizon SPROUTS FARMERS MKT is expected to under-perform the Dow Jones. In addition to that, SPROUTS FARMERS is 2.69 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 -0.01 per unit of volatility. If you would invest 4,491,065 in Dow Jones Industrial on October 30, 2024 and sell it today you would lose (19,707) from holding Dow Jones Industrial or give up 0.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.87% |
| Values | Daily Returns |
SPROUTS FARMERS MKT vs. Dow Jones Industrial
Performance |
| Timeline |
SPROUTS FARMERS and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
SPROUTS FARMERS MKT
Pair trading matchups for SPROUTS FARMERS
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with SPROUTS FARMERS and Dow Jones
The main advantage of trading using opposite SPROUTS FARMERS and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPROUTS FARMERS 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.| SPROUTS FARMERS vs. Align Technology | SPROUTS FARMERS vs. Easy Software AG | SPROUTS FARMERS vs. Charter Communications | SPROUTS FARMERS vs. ARROW ELECTRONICS |
| Dow Jones vs. Snap On | Dow Jones vs. Hillman Solutions Corp | Dow Jones vs. RBC Bearings Incorporated | Dow Jones vs. Rocky Brands |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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