Correlation Between Forafric Global and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Forafric Global 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 Forafric Global and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Forafric Global PLC and Dow Jones Industrial, you can compare the effects of market volatilities on Forafric Global 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 Forafric Global with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forafric Global and Dow Jones.
Diversification Opportunities for Forafric Global and Dow Jones
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Forafric and Dow is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Forafric Global PLC 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 Forafric Global 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 Forafric Global PLC 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 Forafric Global i.e., Forafric Global and Dow Jones go up and down completely randomly.
Pair Corralation between Forafric Global and Dow Jones
Given the investment horizon of 90 days Forafric Global PLC is expected to under-perform the Dow Jones. In addition to that, Forafric Global is 1.74 times more volatile than Dow Jones Industrial. It trades about -0.08 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 4,473,657 in Dow Jones Industrial on October 26, 2024 and sell it today you would lose (17,150) from holding Dow Jones Industrial or give up 0.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Forafric Global PLC vs. Dow Jones Industrial
Performance |
| Timeline |
Forafric Global and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Forafric Global PLC
Pair trading matchups for Forafric Global
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Forafric Global and Dow Jones
The main advantage of trading using opposite Forafric Global and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forafric Global 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.| Forafric Global vs. Forafric Global PLC | Forafric Global vs. GrainCorp Limited | Forafric Global vs. Australian Agricultural | Forafric Global vs. Fresh Del Monte |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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