Correlation Between Dow Jones and CI Group
Can any of the company-specific risk be diversified away by investing in both Dow Jones and CI 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 CI 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 CI Group Public, you can compare the effects of market volatilities on Dow Jones and CI 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 CI Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and CI Group.
Diversification Opportunities for Dow Jones and CI Group
Very weak diversification
The 3 months correlation between Dow and CIG is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and CI Group Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Group Public 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 CI Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Group Public has no effect on the direction of Dow Jones i.e., Dow Jones and CI Group go up and down completely randomly.
Pair Corralation between Dow Jones and CI Group
Assuming the 90 days trading horizon Dow Jones is expected to generate 2.91 times less return on investment than CI Group. But when comparing it to its historical volatility, Dow Jones Industrial is 12.56 times less risky than CI Group. It trades about 0.24 of its potential returns per unit of risk. CI Group Public is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 5.00 in CI Group Public on August 26, 2024 and sell it today you would earn a total of 0.00 from holding CI Group Public or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. CI Group Public
Performance |
| Timeline |
Dow Jones and CI Group Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
CI Group Public
Pair trading matchups for CI Group
Pair Trading with Dow Jones and CI Group
The main advantage of trading using opposite Dow Jones and CI Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, CI 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 CI Group will offset losses from the drop in CI Group's 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 |
| CI Group vs. Jay Mart Public | CI Group vs. KCE Electronics Public | CI Group vs. Hana Microelectronics Public | CI Group vs. Energy Absolute Public |
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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