Correlation Between Archer Daniels and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Archer Daniels 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 Archer Daniels and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Archer Daniels Midland and Dow Jones Industrial, you can compare the effects of market volatilities on Archer Daniels 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 Archer Daniels with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Archer Daniels and Dow Jones.
Diversification Opportunities for Archer Daniels and Dow Jones
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Archer and Dow is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Archer Daniels Midland 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 Archer Daniels 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 Archer Daniels Midland 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 Archer Daniels i.e., Archer Daniels and Dow Jones go up and down completely randomly.
Pair Corralation between Archer Daniels and Dow Jones
Assuming the 90 days trading horizon Archer Daniels Midland is expected to under-perform the Dow Jones. In addition to that, Archer Daniels is 2.95 times more volatile than Dow Jones Industrial. It trades about -0.04 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of volatility. If you would invest 3,313,637 in Dow Jones Industrial on September 23, 2024 and sell it today you would earn a total of 970,389 from holding Dow Jones Industrial or generate 29.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 96.98% |
| Values | Daily Returns |
Archer Daniels Midland vs. Dow Jones Industrial
Performance |
| Timeline |
Archer Daniels and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Archer Daniels Midland
Pair trading matchups for Archer Daniels
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Archer Daniels and Dow Jones
The main advantage of trading using opposite Archer Daniels and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Archer Daniels 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.| Archer Daniels vs. Tyson Foods | Archer Daniels vs. Wilmar International Limited | Archer Daniels vs. MOWI ASA SPADR | Archer Daniels vs. Mowi ASA |
| Dow Jones vs. Nok Airlines Public | Dow Jones vs. Alaska Air Group | Dow Jones vs. Universal Music Group | Dow Jones vs. Copa Holdings SA |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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