Correlation Between Dow Jones and COL Financial
Can any of the company-specific risk be diversified away by investing in both Dow Jones and COL Financial 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 COL Financial 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 COL Financial Group, you can compare the effects of market volatilities on Dow Jones and COL Financial 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 COL Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and COL Financial.
Diversification Opportunities for Dow Jones and COL Financial
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dow and COL is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and COL Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COL Financial 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 COL Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COL Financial Group has no effect on the direction of Dow Jones i.e., Dow Jones and COL Financial go up and down completely randomly.
Pair Corralation between Dow Jones and COL Financial
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.37 times more return on investment than COL Financial. However, Dow Jones Industrial is 2.71 times less risky than COL Financial. It trades about 0.08 of its potential returns per unit of risk. COL Financial Group is currently generating about -0.04 per unit of risk. If you would invest 3,378,148 in Dow Jones Industrial on August 29, 2024 and sell it today you would earn a total of 1,094,058 from holding Dow Jones Industrial or generate 32.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 88.51% |
| Values | Daily Returns |
Dow Jones Industrial vs. COL Financial Group
Performance |
| Timeline |
Dow Jones and COL Financial Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
COL Financial Group
Pair trading matchups for COL Financial
Pair Trading with Dow Jones and COL Financial
The main advantage of trading using opposite Dow Jones and COL Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, COL Financial 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 COL Financial will offset losses from the drop in COL Financial's long position.| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
| COL Financial vs. VistaREIT | COL Financial vs. Bright Kindle Resources | COL Financial vs. Medco Holdings | COL Financial vs. Allhome Corp |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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