Correlation Between Dow Jones and BGF Retail
Can any of the company-specific risk be diversified away by investing in both Dow Jones and BGF Retail 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 BGF Retail 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 BGF Retail Co, you can compare the effects of market volatilities on Dow Jones and BGF Retail 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 BGF Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and BGF Retail.
Diversification Opportunities for Dow Jones and BGF Retail
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dow and BGF is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and BGF Retail Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BGF Retail 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 BGF Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BGF Retail has no effect on the direction of Dow Jones i.e., Dow Jones and BGF Retail go up and down completely randomly.
Pair Corralation between Dow Jones and BGF Retail
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.39 times more return on investment than BGF Retail. However, Dow Jones Industrial is 2.58 times less risky than BGF Retail. It trades about 0.08 of its potential returns per unit of risk. BGF Retail Co is currently generating about -0.06 per unit of risk. If you would invest 3,378,148 in Dow Jones Industrial on August 29, 2024 and sell it today you would earn a total of 1,107,883 from holding Dow Jones Industrial or generate 32.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.37% |
| Values | Daily Returns |
Dow Jones Industrial vs. BGF Retail Co
Performance |
| Timeline |
Dow Jones and BGF Retail Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
BGF Retail Co
Pair trading matchups for BGF Retail
Pair Trading with Dow Jones and BGF Retail
The main advantage of trading using opposite Dow Jones and BGF Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, BGF Retail 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 BGF Retail will offset losses from the drop in BGF Retail's long position.| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
| BGF Retail vs. AptaBio Therapeutics | BGF Retail vs. Daewoo SBI SPAC | BGF Retail vs. Dream Security co | BGF Retail vs. Microfriend |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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