Correlation Between Dow Jones and Cohen
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Cohen 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 Cohen 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 Cohen Company, you can compare the effects of market volatilities on Dow Jones and Cohen 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 Cohen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Cohen.
Diversification Opportunities for Dow Jones and Cohen
Good diversification
The 3 months correlation between Dow and Cohen is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Cohen Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cohen Company 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 Cohen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cohen Company has no effect on the direction of Dow Jones i.e., Dow Jones and Cohen go up and down completely randomly.
Pair Corralation between Dow Jones and Cohen
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.4 times more return on investment than Cohen. However, Dow Jones Industrial is 2.5 times less risky than Cohen. It trades about 0.13 of its potential returns per unit of risk. Cohen Company is currently generating about -0.12 per unit of risk. If you would invest 4,402,581 in Dow Jones Industrial on November 22, 2024 and sell it today you would earn a total of 60,178 from holding Dow Jones Industrial or generate 1.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dow Jones Industrial vs. Cohen Company
Performance |
| Timeline |
Dow Jones and Cohen Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Cohen Company
Pair trading matchups for Cohen
Pair Trading with Dow Jones and Cohen
The main advantage of trading using opposite Dow Jones and Cohen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Cohen 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 Cohen will offset losses from the drop in Cohen's long position.| Dow Jones vs. flyExclusive, | Dow Jones vs. Global Crossing Airlines | Dow Jones vs. Zoom Video Communications | Dow Jones vs. Warner Music Group |
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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