Correlation Between Dow Jones and Gemfields Group
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Gemfields Group 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 Gemfields Group 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 Gemfields Group Limited, you can compare the effects of market volatilities on Dow Jones and Gemfields Group 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 Gemfields Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Gemfields Group.
Diversification Opportunities for Dow Jones and Gemfields Group
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dow and Gemfields is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Gemfields Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gemfields Group 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 Gemfields Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gemfields Group has no effect on the direction of Dow Jones i.e., Dow Jones and Gemfields Group go up and down completely randomly.
Pair Corralation between Dow Jones and Gemfields Group
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.16 times more return on investment than Gemfields Group. However, Dow Jones Industrial is 6.3 times less risky than Gemfields Group. It trades about 0.08 of its potential returns per unit of risk. Gemfields Group Limited is currently generating about -0.02 per unit of risk. If you would invest 3,326,977 in Dow Jones Industrial on September 25, 2024 and sell it today you would earn a total of 1,002,726 from holding Dow Jones Industrial or generate 30.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.22% |
| Values | Daily Returns |
Dow Jones Industrial vs. Gemfields Group Limited
Performance |
| Timeline |
Dow Jones and Gemfields Group Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Gemfields Group Limited
Pair trading matchups for Gemfields Group
Pair Trading with Dow Jones and Gemfields Group
The main advantage of trading using opposite Dow Jones and Gemfields Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Gemfields Group 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 Gemfields Group will offset losses from the drop in Gemfields Group's long position.| Dow Jones vs. Aerofoam Metals | Dow Jones vs. Lion One Metals | Dow Jones vs. Blue Moon Metals | Dow Jones vs. Xunlei Ltd Adr |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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