Correlation Between Conifex Timber and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Conifex Timber 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 Conifex Timber and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Conifex Timber and Dow Jones Industrial, you can compare the effects of market volatilities on Conifex Timber 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 Conifex Timber with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Conifex Timber and Dow Jones.
Diversification Opportunities for Conifex Timber and Dow Jones
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Conifex and Dow is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Conifex Timber 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 Conifex Timber 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 Conifex Timber 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 Conifex Timber i.e., Conifex Timber and Dow Jones go up and down completely randomly.
Pair Corralation between Conifex Timber and Dow Jones
Assuming the 90 days horizon Conifex Timber is expected to generate 24.35 times more return on investment than Dow Jones. However, Conifex Timber is 24.35 times more volatile than Dow Jones Industrial. It trades about 0.02 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.09 per unit of risk. If you would invest 121.00 in Conifex Timber on August 31, 2024 and sell it today you would lose (88.00) from holding Conifex Timber or give up 72.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Conifex Timber vs. Dow Jones Industrial
Performance |
| Timeline |
Conifex Timber and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Conifex Timber
Pair trading matchups for Conifex Timber
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Conifex Timber and Dow Jones
The main advantage of trading using opposite Conifex Timber and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Conifex Timber 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.| Conifex Timber vs. Eastman Chemical | Conifex Timber vs. CF Industries Holdings | Conifex Timber vs. Sensient Technologies | Conifex Timber vs. Avient Corp |
| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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