Correlation Between Dow Jones and Falcon Gold
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Falcon Gold 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 Falcon Gold 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 Falcon Gold Corp, you can compare the effects of market volatilities on Dow Jones and Falcon Gold 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 Falcon Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Falcon Gold.
Diversification Opportunities for Dow Jones and Falcon Gold
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Falcon is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Falcon Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Gold Corp 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 Falcon Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Gold Corp has no effect on the direction of Dow Jones i.e., Dow Jones and Falcon Gold go up and down completely randomly.
Pair Corralation between Dow Jones and Falcon Gold
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.09 times more return on investment than Falcon Gold. However, Dow Jones Industrial is 10.86 times less risky than Falcon Gold. It trades about 0.27 of its potential returns per unit of risk. Falcon Gold Corp is currently generating about -0.07 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 247,274 from holding Dow Jones Industrial or generate 5.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Falcon Gold Corp
Performance |
| Timeline |
Dow Jones and Falcon Gold Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Falcon Gold Corp
Pair trading matchups for Falcon Gold
Pair Trading with Dow Jones and Falcon Gold
The main advantage of trading using opposite Dow Jones and Falcon Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Falcon Gold 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 Falcon Gold will offset losses from the drop in Falcon Gold'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 |
| Falcon Gold vs. Aurion Resources | Falcon Gold vs. Liberty Gold Corp | Falcon Gold vs. Orezone Gold Corp | Falcon Gold vs. Fortuna Silver Mines |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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