Correlation Between Dow Jones and Findev
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Findev 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 Findev 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 Findev Inc, you can compare the effects of market volatilities on Dow Jones and Findev 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 Findev. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Findev.
Diversification Opportunities for Dow Jones and Findev
Very poor diversification
The 3 months correlation between Dow and Findev is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Findev Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Findev Inc 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 Findev. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Findev Inc has no effect on the direction of Dow Jones i.e., Dow Jones and Findev go up and down completely randomly.
Pair Corralation between Dow Jones and Findev
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.03 times less return on investment than Findev. But when comparing it to its historical volatility, Dow Jones Industrial is 2.63 times less risky than Findev. It trades about 0.16 of its potential returns per unit of risk. Findev Inc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 41.00 in Findev Inc on September 1, 2024 and sell it today you would earn a total of 6.00 from holding Findev Inc or generate 14.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Dow Jones Industrial vs. Findev Inc
Performance |
| Timeline |
Dow Jones and Findev Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Findev Inc
Pair trading matchups for Findev
Pair Trading with Dow Jones and Findev
The main advantage of trading using opposite Dow Jones and Findev positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Findev 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 Findev will offset losses from the drop in Findev's long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| Findev vs. Timbercreek Financial Corp | Findev vs. Firm Capital Mortgage | Findev vs. MCAN Mortgage | Findev vs. First National Financial |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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