Correlation Between Business First and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Business First 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 Business First and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Business First Bancshares and Dow Jones Industrial, you can compare the effects of market volatilities on Business First 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 Business First with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Business First and Dow Jones.
Diversification Opportunities for Business First and Dow Jones
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Business and Dow is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Business First Bancshares 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 Business First 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 Business First Bancshares 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 Business First i.e., Business First and Dow Jones go up and down completely randomly.
Pair Corralation between Business First and Dow Jones
Given the investment horizon of 90 days Business First Bancshares is expected to generate 3.57 times more return on investment than Dow Jones. However, Business First is 3.57 times more volatile than Dow Jones Industrial. It trades about 0.14 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.26 per unit of risk. If you would invest 2,641 in Business First Bancshares on August 27, 2024 and sell it today you would earn a total of 254.00 from holding Business First Bancshares or generate 9.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Business First Bancshares vs. Dow Jones Industrial
Performance |
| Timeline |
Business First and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Business First Bancshares
Pair trading matchups for Business First
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Business First and Dow Jones
The main advantage of trading using opposite Business First and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Business First 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.| Business First vs. First Community | Business First vs. Community West Bancshares | Business First vs. First Financial Northwest | Business First vs. First Northwest Bancorp |
| 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |