Correlation Between Buffalo Small and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Buffalo Small 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 Buffalo Small and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Buffalo Small Cap and Dow Jones Industrial, you can compare the effects of market volatilities on Buffalo Small 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 Buffalo Small with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Buffalo Small and Dow Jones.
Diversification Opportunities for Buffalo Small and Dow Jones
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Buffalo and Dow is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Buffalo Small Cap 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 Buffalo Small 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 Buffalo Small Cap 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 Buffalo Small i.e., Buffalo Small and Dow Jones go up and down completely randomly.
Pair Corralation between Buffalo Small and Dow Jones
Assuming the 90 days horizon Buffalo Small Cap is expected to generate 1.69 times more return on investment than Dow Jones. However, Buffalo Small is 1.69 times more volatile than Dow Jones Industrial. It trades about 0.16 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.25 per unit of risk. If you would invest 1,517 in Buffalo Small Cap on August 29, 2024 and sell it today you would earn a total of 87.00 from holding Buffalo Small Cap or generate 5.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Buffalo Small Cap vs. Dow Jones Industrial
Performance |
| Timeline |
Buffalo Small and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Buffalo Small Cap
Pair trading matchups for Buffalo Small
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Buffalo Small and Dow Jones
The main advantage of trading using opposite Buffalo Small and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Buffalo Small 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.| Buffalo Small vs. John Hancock Money | Buffalo Small vs. Financial Industries Fund | Buffalo Small vs. T Rowe Price | Buffalo Small vs. Blrc Sgy Mnp |
| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |