Correlation Between Dow Jones and ADF Foods
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By analyzing existing cross correlation between Dow Jones Industrial and ADF Foods Limited, you can compare the effects of market volatilities on Dow Jones and ADF Foods 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 ADF Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and ADF Foods.
Diversification Opportunities for Dow Jones and ADF Foods
Poor diversification
The 3 months correlation between Dow and ADF is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and ADF Foods Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADF Foods Limited 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 ADF Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADF Foods Limited has no effect on the direction of Dow Jones i.e., Dow Jones and ADF Foods go up and down completely randomly.
Pair Corralation between Dow Jones and ADF Foods
Assuming the 90 days trading horizon Dow Jones is expected to generate 2.95 times less return on investment than ADF Foods. But when comparing it to its historical volatility, Dow Jones Industrial is 4.04 times less risky than ADF Foods. It trades about 0.14 of its potential returns per unit of risk. ADF Foods Limited is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 21,693 in ADF Foods Limited on August 25, 2024 and sell it today you would earn a total of 8,627 from holding ADF Foods Limited or generate 39.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Dow Jones Industrial vs. ADF Foods Limited
Performance |
| Timeline |
Dow Jones and ADF Foods Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
ADF Foods Limited
Pair trading matchups for ADF Foods
Pair Trading with Dow Jones and ADF Foods
The main advantage of trading using opposite Dow Jones and ADF Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, ADF Foods 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 ADF Foods will offset losses from the drop in ADF Foods' long position.| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
| ADF Foods vs. Reliance Industries Limited | ADF Foods vs. State Bank of | ADF Foods vs. HDFC Bank Limited | ADF Foods vs. Oil Natural Gas |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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