Correlation Between Dow Jones and FORWARD AIR
Can any of the company-specific risk be diversified away by investing in both Dow Jones and FORWARD AIR 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 FORWARD AIR 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 FORWARD AIR P, you can compare the effects of market volatilities on Dow Jones and FORWARD AIR 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 FORWARD AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and FORWARD AIR.
Diversification Opportunities for Dow Jones and FORWARD AIR
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dow and FORWARD is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and FORWARD AIR P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FORWARD AIR P 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 FORWARD AIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FORWARD AIR P has no effect on the direction of Dow Jones i.e., Dow Jones and FORWARD AIR go up and down completely randomly.
Pair Corralation between Dow Jones and FORWARD AIR
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.21 times less return on investment than FORWARD AIR. But when comparing it to its historical volatility, Dow Jones Industrial is 7.6 times less risky than FORWARD AIR. It trades about 0.08 of its potential returns per unit of risk. FORWARD AIR P is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 3,940 in FORWARD AIR P on November 3, 2024 and sell it today you would lose (740.00) from holding FORWARD AIR P or give up 18.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Dow Jones Industrial vs. FORWARD AIR P
Performance |
| Timeline |
Dow Jones and FORWARD AIR Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
FORWARD AIR P
Pair trading matchups for FORWARD AIR
Pair Trading with Dow Jones and FORWARD AIR
The main advantage of trading using opposite Dow Jones and FORWARD AIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, FORWARD AIR 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 FORWARD AIR will offset losses from the drop in FORWARD AIR's long position.| Dow Jones vs. Rambler Metals and | Dow Jones vs. Nicola Mining | Dow Jones vs. Old Dominion Freight | Dow Jones vs. United Guardian |
| FORWARD AIR vs. CN DATANG C | FORWARD AIR vs. Linedata Services SA | FORWARD AIR vs. Northern Data AG | FORWARD AIR vs. DATAGROUP SE |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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