Correlation Between Dow Jones and Macy
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Macy 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 Macy 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 Macy Inc, you can compare the effects of market volatilities on Dow Jones and Macy 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 Macy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Macy.
Diversification Opportunities for Dow Jones and Macy
Very weak diversification
The 3 months correlation between Dow and Macy is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Macy Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macy Inc 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 Macy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macy Inc has no effect on the direction of Dow Jones i.e., Dow Jones and Macy go up and down completely randomly.
Pair Corralation between Dow Jones and Macy
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.33 times more return on investment than Macy. However, Dow Jones Industrial is 3.07 times less risky than Macy. It trades about 0.34 of its potential returns per unit of risk. Macy Inc is currently generating about 0.08 per unit of risk. If you would invest 4,205,219 in Dow Jones Industrial on September 2, 2024 and sell it today you would earn a total of 285,846 from holding Dow Jones Industrial or generate 6.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dow Jones Industrial vs. Macy Inc
Performance |
| Timeline |
Dow Jones and Macy Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Macy Inc
Pair trading matchups for Macy
Pair Trading with Dow Jones and Macy
The main advantage of trading using opposite Dow Jones and Macy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Macy 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 Macy will offset losses from the drop in Macy's long position.| Dow Jones vs. Dream Finders Homes | Dow Jones vs. GEN Restaurant Group, | Dow Jones vs. National Beverage Corp | Dow Jones vs. BJs Restaurants |
| Macy vs. Coeur Mining | Macy vs. The Mercantile Investment | Macy vs. Silvercorp Metals | Macy vs. British American Tobacco |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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