Correlation Between Dow Jones and FNC Entertainment
Can any of the company-specific risk be diversified away by investing in both Dow Jones and FNC Entertainment 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 FNC Entertainment 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 FNC Entertainment Co, you can compare the effects of market volatilities on Dow Jones and FNC Entertainment 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 FNC Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and FNC Entertainment.
Diversification Opportunities for Dow Jones and FNC Entertainment
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dow and FNC is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and FNC Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FNC Entertainment 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 FNC Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FNC Entertainment has no effect on the direction of Dow Jones i.e., Dow Jones and FNC Entertainment go up and down completely randomly.
Pair Corralation between Dow Jones and FNC Entertainment
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.31 times more return on investment than FNC Entertainment. However, Dow Jones Industrial is 3.22 times less risky than FNC Entertainment. It trades about 0.17 of its potential returns per unit of risk. FNC Entertainment Co is currently generating about 0.03 per unit of risk. If you would invest 4,133,505 in Dow Jones Industrial on August 29, 2024 and sell it today you would earn a total of 352,526 from holding Dow Jones Industrial or generate 8.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 92.19% |
| Values | Daily Returns |
Dow Jones Industrial vs. FNC Entertainment Co
Performance |
| Timeline |
Dow Jones and FNC Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
FNC Entertainment Co
Pair trading matchups for FNC Entertainment
Pair Trading with Dow Jones and FNC Entertainment
The main advantage of trading using opposite Dow Jones and FNC Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, FNC Entertainment 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 FNC Entertainment will offset losses from the drop in FNC Entertainment's long position.| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
| FNC Entertainment vs. Korea New Network | FNC Entertainment vs. Busan Industrial Co | FNC Entertainment vs. Busan Ind | FNC Entertainment vs. Shinhan WTI Futures |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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