Correlation Between Dow Jones and FFHG
Can any of the company-specific risk be diversified away by investing in both Dow Jones and FFHG 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 FFHG 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 FFHG, you can compare the effects of market volatilities on Dow Jones and FFHG 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 FFHG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and FFHG.
Diversification Opportunities for Dow Jones and FFHG
Very poor diversification
The 3 months correlation between Dow and FFHG is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and FFHG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FFHG 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 FFHG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FFHG has no effect on the direction of Dow Jones i.e., Dow Jones and FFHG go up and down completely randomly.
Pair Corralation between Dow Jones and FFHG
If you would invest 4,214,154 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 258,052 from holding Dow Jones Industrial or generate 6.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 4.55% |
| Values | Daily Returns |
Dow Jones Industrial vs. FFHG
Performance |
| Timeline |
Dow Jones and FFHG Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
FFHG
Pair trading matchups for FFHG
Pair Trading with Dow Jones and FFHG
The main advantage of trading using opposite Dow Jones and FFHG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, FFHG 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 FFHG will offset losses from the drop in FFHG's long position.| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
| FFHG vs. FT Vest Equity | FFHG vs. Zillow Group Class | FFHG vs. Northern Lights | FFHG vs. VanEck Vectors Moodys |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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