Correlation Between Dow Jones and Canadian General
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Canadian General 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 Canadian General 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 Canadian General Investments, you can compare the effects of market volatilities on Dow Jones and Canadian General 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 Canadian General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Canadian General.
Diversification Opportunities for Dow Jones and Canadian General
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Canadian is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Canadian General Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian General Inv 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 Canadian General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian General Inv has no effect on the direction of Dow Jones i.e., Dow Jones and Canadian General go up and down completely randomly.
Pair Corralation between Dow Jones and Canadian General
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.83 times more return on investment than Canadian General. However, Dow Jones Industrial is 1.21 times less risky than Canadian General. It trades about -0.24 of its potential returns per unit of risk. Canadian General Investments is currently generating about -0.24 per unit of risk. If you would invest 4,440,193 in Dow Jones Industrial on October 10, 2024 and sell it today you would lose (176,673) from holding Dow Jones Industrial or give up 3.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Dow Jones Industrial vs. Canadian General Investments
Performance |
| Timeline |
Dow Jones and Canadian General Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Canadian General Investments
Pair trading matchups for Canadian General
Pair Trading with Dow Jones and Canadian General
The main advantage of trading using opposite Dow Jones and Canadian General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Canadian General 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 Canadian General will offset losses from the drop in Canadian General's long position.| Dow Jones vs. Thai Beverage PCL | Dow Jones vs. ServiceNow | Dow Jones vs. Loud Beverage Group | Dow Jones vs. Suntory Beverage Food |
| Canadian General vs. Associated British Foods | Canadian General vs. Travel Leisure Co | Canadian General vs. Beazer Homes USA | Canadian General vs. bet at home AG |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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