Correlation Between Dow Jones and Bank Islam
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Bank Islam 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 Bank Islam 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 Bank Islam Malaysia, you can compare the effects of market volatilities on Dow Jones and Bank Islam 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 Bank Islam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Bank Islam.
Diversification Opportunities for Dow Jones and Bank Islam
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dow and Bank is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Bank Islam Malaysia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Islam Malaysia 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 Bank Islam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Islam Malaysia has no effect on the direction of Dow Jones i.e., Dow Jones and Bank Islam go up and down completely randomly.
Pair Corralation between Dow Jones and Bank Islam
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.72 times more return on investment than Bank Islam. However, Dow Jones Industrial is 1.4 times less risky than Bank Islam. It trades about 0.07 of its potential returns per unit of risk. Bank Islam Malaysia is currently generating about -0.05 per unit of risk. If you would invest 4,150,310 in Dow Jones Industrial on October 18, 2024 and sell it today you would earn a total of 171,845 from holding Dow Jones Industrial or generate 4.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Bank Islam Malaysia
Performance |
| Timeline |
Dow Jones and Bank Islam Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Bank Islam Malaysia
Pair trading matchups for Bank Islam
Pair Trading with Dow Jones and Bank Islam
The main advantage of trading using opposite Dow Jones and Bank Islam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Bank Islam 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 Bank Islam will offset losses from the drop in Bank Islam's long position.| Dow Jones vs. JD Sports Fashion | Dow Jones vs. Titan Machinery | Dow Jones vs. Canlan Ice Sports | Dow Jones vs. Playa Hotels Resorts |
| Bank Islam vs. Malayan Banking Bhd | Bank Islam vs. Public Bank Bhd | Bank Islam vs. Petronas Chemicals Group | Bank Islam vs. Tenaga Nasional Bhd |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |