Correlation Between Dow Jones and Citizens Bancorp
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Citizens Bancorp 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 Citizens Bancorp 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 Citizens Bancorp of, you can compare the effects of market volatilities on Dow Jones and Citizens Bancorp 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 Citizens Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Citizens Bancorp.
Diversification Opportunities for Dow Jones and Citizens Bancorp
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Citizens is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Citizens Bancorp of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Bancorp 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 Citizens Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Bancorp has no effect on the direction of Dow Jones i.e., Dow Jones and Citizens Bancorp go up and down completely randomly.
Pair Corralation between Dow Jones and Citizens Bancorp
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.33 times more return on investment than Citizens Bancorp. However, Dow Jones is 1.33 times more volatile than Citizens Bancorp of. It trades about -0.21 of its potential returns per unit of risk. Citizens Bancorp of is currently generating about -0.32 per unit of risk. If you would invest 4,471,358 in Dow Jones Industrial on November 28, 2024 and sell it today you would lose (128,046) from holding Dow Jones Industrial or give up 2.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Citizens Bancorp of
Performance |
| Timeline |
Dow Jones and Citizens Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Citizens Bancorp of
Pair trading matchups for Citizens Bancorp
Pair Trading with Dow Jones and Citizens Bancorp
The main advantage of trading using opposite Dow Jones and Citizens Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Citizens Bancorp 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 Citizens Bancorp will offset losses from the drop in Citizens Bancorp's long position.| Dow Jones vs. Starbucks | Dow Jones vs. Westinghouse Air Brake | Dow Jones vs. Finnair Oyj | Dow Jones vs. Mesa Air Group |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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