Correlation Between Dow Jones and Desjardins
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Desjardins 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 Desjardins 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 Desjardins RI USA, you can compare the effects of market volatilities on Dow Jones and Desjardins 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 Desjardins. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Desjardins.
Diversification Opportunities for Dow Jones and Desjardins
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dow and Desjardins is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Desjardins RI USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Desjardins RI USA 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 Desjardins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Desjardins RI USA has no effect on the direction of Dow Jones i.e., Dow Jones and Desjardins go up and down completely randomly.
Pair Corralation between Dow Jones and Desjardins
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.21 times less return on investment than Desjardins. But when comparing it to its historical volatility, Dow Jones Industrial is 1.09 times less risky than Desjardins. It trades about 0.16 of its potential returns per unit of risk. Desjardins RI USA is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 3,172 in Desjardins RI USA on September 1, 2024 and sell it today you would earn a total of 646.00 from holding Desjardins RI USA or generate 20.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Dow Jones Industrial vs. Desjardins RI USA
Performance |
| Timeline |
Dow Jones and Desjardins Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Desjardins RI USA
Pair trading matchups for Desjardins
Pair Trading with Dow Jones and Desjardins
The main advantage of trading using opposite Dow Jones and Desjardins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Desjardins 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 Desjardins will offset losses from the drop in Desjardins' long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| Desjardins vs. Brompton Global Dividend | Desjardins vs. Global Healthcare Income | Desjardins vs. Tech Leaders Income | Desjardins vs. Brompton North American |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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