Correlation Between Investment and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Investment 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 Investment and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investment and Industrial and Dow Jones Industrial, you can compare the effects of market volatilities on Investment 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 Investment with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investment and Dow Jones.
Diversification Opportunities for Investment and Dow Jones
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Investment and Dow is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Investment and Industrial 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 Investment 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 Investment and Industrial 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 Investment i.e., Investment and Dow Jones go up and down completely randomly.
Pair Corralation between Investment and Dow Jones
Assuming the 90 days trading horizon Investment and Industrial is expected to under-perform the Dow Jones. In addition to that, Investment is 1.52 times more volatile than Dow Jones Industrial. It trades about -0.02 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.37 per unit of volatility. If you would invest 4,176,346 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 314,719 from holding Dow Jones Industrial or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Investment and Industrial vs. Dow Jones Industrial
Performance |
| Timeline |
Investment and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Investment and Industrial
Pair trading matchups for Investment
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Investment and Dow Jones
The main advantage of trading using opposite Investment and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investment 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.| Investment vs. FIT INVEST JSC | Investment vs. Damsan JSC | Investment vs. An Phat Plastic | Investment vs. Alphanam ME |
| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |