Correlation Between Amana Developing and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Amana Developing 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 Amana Developing and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amana Developing World and Dow Jones Industrial, you can compare the effects of market volatilities on Amana Developing 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 Amana Developing with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amana Developing and Dow Jones.
Diversification Opportunities for Amana Developing and Dow Jones
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Amana and Dow is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Amana Developing World 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 Amana Developing 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 Amana Developing World 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 Amana Developing i.e., Amana Developing and Dow Jones go up and down completely randomly.
Pair Corralation between Amana Developing and Dow Jones
Assuming the 90 days horizon Amana Developing is expected to generate 2.73 times less return on investment than Dow Jones. In addition to that, Amana Developing is 1.15 times more volatile than Dow Jones Industrial. It trades about 0.07 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.23 per unit of volatility. If you would invest 3,870,327 in Dow Jones Industrial on September 4, 2024 and sell it today you would earn a total of 607,873 from holding Dow Jones Industrial or generate 15.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amana Developing World vs. Dow Jones Industrial
Performance |
| Timeline |
Amana Developing and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Amana Developing World
Pair trading matchups for Amana Developing
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Amana Developing and Dow Jones
The main advantage of trading using opposite Amana Developing and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amana Developing 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.| Amana Developing vs. Amana Income Fund | Amana Developing vs. Amana Growth Fund | Amana Developing vs. Amana Participation Fund | Amana Developing vs. Azzad Ethical Fund |
| Dow Jones vs. Gentex | Dow Jones vs. American Axle Manufacturing | Dow Jones vs. Pearson PLC ADR | Dow Jones vs. Marine Products |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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