Correlation Between Azzad Ethical and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Azzad Ethical 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 Azzad Ethical and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Azzad Ethical Fund and Dow Jones Industrial, you can compare the effects of market volatilities on Azzad Ethical 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 Azzad Ethical with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Azzad Ethical and Dow Jones.
Diversification Opportunities for Azzad Ethical and Dow Jones
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Azzad and Dow is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Azzad Ethical Fund 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 Azzad Ethical 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 Azzad Ethical Fund 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 Azzad Ethical i.e., Azzad Ethical and Dow Jones go up and down completely randomly.
Pair Corralation between Azzad Ethical and Dow Jones
Assuming the 90 days horizon Azzad Ethical Fund is expected to generate 1.61 times more return on investment than Dow Jones. However, Azzad Ethical is 1.61 times more volatile than Dow Jones Industrial. It trades about 0.06 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.09 per unit of risk. If you would invest 1,365 in Azzad Ethical Fund on September 12, 2024 and sell it today you would earn a total of 451.00 from holding Azzad Ethical Fund or generate 33.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Azzad Ethical Fund vs. Dow Jones Industrial
Performance |
| Timeline |
Azzad Ethical and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Azzad Ethical Fund
Pair trading matchups for Azzad Ethical
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Azzad Ethical and Dow Jones
The main advantage of trading using opposite Azzad Ethical and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Azzad Ethical 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.| Azzad Ethical vs. T Rowe Price | Azzad Ethical vs. T Rowe Price | Azzad Ethical vs. SCOR PK | Azzad Ethical vs. Morningstar Unconstrained Allocation |
| Dow Jones vs. Aeye Inc | Dow Jones vs. Gentex | Dow Jones vs. Marine Products | Dow Jones vs. CarsalesCom Ltd ADR |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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