Correlation Between Dow Jones and Foodnamoo
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Foodnamoo 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 Foodnamoo 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 Foodnamoo, you can compare the effects of market volatilities on Dow Jones and Foodnamoo 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 Foodnamoo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Foodnamoo.
Diversification Opportunities for Dow Jones and Foodnamoo
Very poor diversification
The 3 months correlation between Dow and Foodnamoo is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Foodnamoo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foodnamoo 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 Foodnamoo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foodnamoo has no effect on the direction of Dow Jones i.e., Dow Jones and Foodnamoo go up and down completely randomly.
Pair Corralation between Dow Jones and Foodnamoo
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the Foodnamoo. But the index apears to be less risky and, when comparing its historical volatility, Dow Jones Industrial is 1.83 times less risky than Foodnamoo. The index trades about -0.12 of its potential returns per unit of risk. The Foodnamoo is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 230,000 in Foodnamoo on January 20, 2025 and sell it today you would lose (18,000) from holding Foodnamoo or give up 7.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dow Jones Industrial vs. Foodnamoo
Performance |
| Timeline |
Dow Jones and Foodnamoo Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Foodnamoo
Pair trading matchups for Foodnamoo
Pair Trading with Dow Jones and Foodnamoo
The main advantage of trading using opposite Dow Jones and Foodnamoo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Foodnamoo 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 Foodnamoo will offset losses from the drop in Foodnamoo's long position.| Dow Jones vs. Western Digital | Dow Jones vs. Procter Gamble | Dow Jones vs. Nasdaq Inc | Dow Jones vs. FARO Technologies |
| Foodnamoo vs. Cherrybro coLtd | Foodnamoo vs. Samsung Publishing Co | Foodnamoo vs. Busan Industrial Co | Foodnamoo vs. Finebesteel |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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