Correlation Between Bel Fuse and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Bel Fuse 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 Bel Fuse and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bel Fuse A and Dow Jones Industrial, you can compare the effects of market volatilities on Bel Fuse 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 Bel Fuse with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bel Fuse and Dow Jones.
Diversification Opportunities for Bel Fuse and Dow Jones
Very weak diversification
The 3 months correlation between Bel and Dow is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Bel Fuse A 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 Bel Fuse 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 Bel Fuse A 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 Bel Fuse i.e., Bel Fuse and Dow Jones go up and down completely randomly.
Pair Corralation between Bel Fuse and Dow Jones
Assuming the 90 days horizon Bel Fuse A is expected to generate 4.19 times more return on investment than Dow Jones. However, Bel Fuse is 4.19 times more volatile than Dow Jones Industrial. It trades about 0.09 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of risk. If you would invest 3,177 in Bel Fuse A on August 28, 2024 and sell it today you would earn a total of 6,426 from holding Bel Fuse A or generate 202.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Bel Fuse A vs. Dow Jones Industrial
Performance |
| Timeline |
Bel Fuse and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Bel Fuse A
Pair trading matchups for Bel Fuse
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Bel Fuse and Dow Jones
The main advantage of trading using opposite Bel Fuse and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bel Fuse 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.| Bel Fuse vs. Richardson Electronics | Bel Fuse vs. LSI Industries | Bel Fuse vs. Benchmark Electronics | Bel Fuse vs. Plexus Corp |
| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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