Correlation Between BROOKFBH 462 and Dow Jones
Can any of the company-specific risk be diversified away by investing in both BROOKFBH 462 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 BROOKFBH 462 and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BROOKFBH 462 PRSNU and Dow Jones Industrial, you can compare the effects of market volatilities on BROOKFBH 462 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 BROOKFBH 462 with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of BROOKFBH 462 and Dow Jones.
Diversification Opportunities for BROOKFBH 462 and Dow Jones
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BROOKFBH and Dow is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding BROOKFBH 462 PRSNU 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 BROOKFBH 462 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 BROOKFBH 462 PRSNU 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 BROOKFBH 462 i.e., BROOKFBH 462 and Dow Jones go up and down completely randomly.
Pair Corralation between BROOKFBH 462 and Dow Jones
Assuming the 90 days horizon BROOKFBH 462 is expected to generate 1.16 times less return on investment than Dow Jones. In addition to that, BROOKFBH 462 is 2.85 times more volatile than Dow Jones Industrial. It trades about 0.05 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 3,292,896 in Dow Jones Industrial on August 25, 2024 and sell it today you would earn a total of 1,136,755 from holding Dow Jones Industrial or generate 34.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.94% |
| Values | Daily Returns |
BROOKFBH 462 PRSNU vs. Dow Jones Industrial
Performance |
| Timeline |
BROOKFBH 462 and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
BROOKFBH 462 PRSNU
Pair trading matchups for BROOKFBH 462
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with BROOKFBH 462 and Dow Jones
The main advantage of trading using opposite BROOKFBH 462 and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BROOKFBH 462 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.| BROOKFBH 462 vs. Suntory Beverage Food | BROOKFBH 462 vs. China Resources Beer | BROOKFBH 462 vs. Thai Beverage Public | BROOKFBH 462 vs. SIDETRADE EO 1 |
| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
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.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |