Correlation Between Cm Commodity and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Cm Commodity 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 Cm Commodity and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cm Modity Index and Dow Jones Industrial, you can compare the effects of market volatilities on Cm Commodity 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 Cm Commodity with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cm Commodity and Dow Jones.
Diversification Opportunities for Cm Commodity and Dow Jones
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between COMIX and Dow is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Cm Modity Index 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 Cm Commodity 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 Cm Modity Index 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 Cm Commodity i.e., Cm Commodity and Dow Jones go up and down completely randomly.
Pair Corralation between Cm Commodity and Dow Jones
Assuming the 90 days horizon Cm Modity Index is expected to under-perform the Dow Jones. But the mutual fund apears to be less risky and, when comparing its historical volatility, Cm Modity Index is 1.04 times less risky than Dow Jones. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Dow Jones Industrial is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 3,880,733 in Dow Jones Industrial on September 3, 2024 and sell it today you would earn a total of 610,332 from holding Dow Jones Industrial or generate 15.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cm Modity Index vs. Dow Jones Industrial
Performance |
| Timeline |
Cm Commodity and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Cm Modity Index
Pair trading matchups for Cm Commodity
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Cm Commodity and Dow Jones
The main advantage of trading using opposite Cm Commodity and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cm Commodity 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.| Cm Commodity vs. John Hancock Money | Cm Commodity vs. Wells Fargo Funds | Cm Commodity vs. Franklin Government Money | Cm Commodity vs. Wt Mutual Fund |
| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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