Correlation Between Dow Jones and Edita Food
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Edita Food 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 Edita Food 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 Edita Food Industries, you can compare the effects of market volatilities on Dow Jones and Edita Food 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 Edita Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Edita Food.
Diversification Opportunities for Dow Jones and Edita Food
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dow and Edita is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Edita Food Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edita Food Industries 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 Edita Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edita Food Industries has no effect on the direction of Dow Jones i.e., Dow Jones and Edita Food go up and down completely randomly.
Pair Corralation between Dow Jones and Edita Food
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.17 times more return on investment than Edita Food. However, Dow Jones Industrial is 5.99 times less risky than Edita Food. It trades about 0.26 of its potential returns per unit of risk. Edita Food Industries is currently generating about -0.2 per unit of risk. If you would invest 4,238,757 in Dow Jones Industrial on August 28, 2024 and sell it today you would earn a total of 234,900 from holding Dow Jones Industrial or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dow Jones Industrial vs. Edita Food Industries
Performance |
| Timeline |
Dow Jones and Edita Food Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Edita Food Industries
Pair trading matchups for Edita Food
Pair Trading with Dow Jones and Edita Food
The main advantage of trading using opposite Dow Jones and Edita Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Edita Food 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 Edita Food will offset losses from the drop in Edita Food's long position.| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
| Edita Food vs. Samsung Electronics Co | Edita Food vs. Samsung Electronics Co | Edita Food vs. Hyundai Motor | Edita Food vs. Toyota Motor 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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