Correlation Between Dow Jones and Federated High
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Federated High 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 Federated High 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 Federated High Income, you can compare the effects of market volatilities on Dow Jones and Federated High 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 Federated High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Federated High.
Diversification Opportunities for Dow Jones and Federated High
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Federated is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Federated High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated High Income 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 Federated High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated High Income has no effect on the direction of Dow Jones i.e., Dow Jones and Federated High go up and down completely randomly.
Pair Corralation between Dow Jones and Federated High
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 4.84 times more return on investment than Federated High. However, Dow Jones is 4.84 times more volatile than Federated High Income. It trades about 0.16 of its potential returns per unit of risk. Federated High Income is currently generating about 0.27 per unit of risk. If you would invest 3,857,103 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 633,962 from holding Dow Jones Industrial or generate 16.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Dow Jones Industrial vs. Federated High Income
Performance |
| Timeline |
Dow Jones and Federated High Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Federated High Income
Pair trading matchups for Federated High
Pair Trading with Dow Jones and Federated High
The main advantage of trading using opposite Dow Jones and Federated High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Federated High 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 Federated High will offset losses from the drop in Federated High's long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| Federated High vs. Ms Global Fixed | Federated High vs. T Rowe Price | Federated High vs. Versatile Bond Portfolio | Federated High vs. Ab Global Bond |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |