Correlation Between Dow Jones and First Bankers
Can any of the company-specific risk be diversified away by investing in both Dow Jones and First Bankers 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 First Bankers 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 First Bankers Trustshares, you can compare the effects of market volatilities on Dow Jones and First Bankers 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 First Bankers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and First Bankers.
Diversification Opportunities for Dow Jones and First Bankers
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and First is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and First Bankers Trustshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Bankers Trustshares 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 First Bankers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Bankers Trustshares has no effect on the direction of Dow Jones i.e., Dow Jones and First Bankers go up and down completely randomly.
Pair Corralation between Dow Jones and First Bankers
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.19 times less return on investment than First Bankers. But when comparing it to its historical volatility, Dow Jones Industrial is 1.43 times less risky than First Bankers. It trades about 0.21 of its potential returns per unit of risk. First Bankers Trustshares is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,600 in First Bankers Trustshares on August 25, 2024 and sell it today you would earn a total of 85.00 from holding First Bankers Trustshares or generate 5.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. First Bankers Trustshares
Performance |
| Timeline |
Dow Jones and First Bankers Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
First Bankers Trustshares
Pair trading matchups for First Bankers
Pair Trading with Dow Jones and First Bankers
The main advantage of trading using opposite Dow Jones and First Bankers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, First Bankers 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 First Bankers will offset losses from the drop in First Bankers' long position.| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
| First Bankers vs. Greenville Federal Financial | First Bankers vs. First Ottawa Bancshares | First Bankers vs. Coastal Carolina Bancshares | First Bankers vs. Citizens Bancorp Investment |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |