Correlation Between Dow Jones and I Components
Can any of the company-specific risk be diversified away by investing in both Dow Jones and I Components 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 Dow Jones and I Components into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and i Components Co, you can compare the effects of market volatilities on Dow Jones and I Components 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 Dow Jones with a short position of I Components. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and I Components.
Diversification Opportunities for Dow Jones and I Components
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and 059100 is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and i Components Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on i Components and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with I Components. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of i Components has no effect on the direction of Dow Jones i.e., Dow Jones and I Components go up and down completely randomly.
Pair Corralation between Dow Jones and I Components
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the I Components. But the index apears to be less risky and, when comparing its historical volatility, Dow Jones Industrial is 2.45 times less risky than I Components. The index trades about -0.27 of its potential returns per unit of risk. The i Components Co is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 470,000 in i Components Co on October 13, 2024 and sell it today you would earn a total of 68,000 from holding i Components Co or generate 14.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. i Components Co
Performance |
| Timeline |
Dow Jones and I Components Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
i Components Co
Pair trading matchups for I Components
Pair Trading with Dow Jones and I Components
The main advantage of trading using opposite Dow Jones and I Components positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, I Components 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 I Components will offset losses from the drop in I Components' long position.| Dow Jones vs. BRP Inc | Dow Jones vs. Magnite | Dow Jones vs. Integral Ad Science | Dow Jones vs. Global E Online |
| I Components vs. Atinum Investment Co | I Components vs. NICE Information Service | I Components vs. NH Investment Securities | I Components vs. Lotte Data Communication |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |