Correlation Between Dow Jones and Farmers
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Farmers 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 Farmers 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 Farmers And Merchants, you can compare the effects of market volatilities on Dow Jones and Farmers 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 Farmers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Farmers.
Diversification Opportunities for Dow Jones and Farmers
Almost no diversification
The 3 months correlation between Dow and Farmers is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Farmers And Merchants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers And Merchants 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 Farmers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers And Merchants has no effect on the direction of Dow Jones i.e., Dow Jones and Farmers go up and down completely randomly.
Pair Corralation between Dow Jones and Farmers
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.46 times more return on investment than Farmers. However, Dow Jones Industrial is 2.16 times less risky than Farmers. It trades about 0.12 of its potential returns per unit of risk. Farmers And Merchants is currently generating about 0.03 per unit of risk. If you would invest 3,383,361 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 1,107,704 from holding Dow Jones Industrial or generate 32.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 98.4% |
| Values | Daily Returns |
Dow Jones Industrial vs. Farmers And Merchants
Performance |
| Timeline |
Dow Jones and Farmers Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Farmers And Merchants
Pair trading matchups for Farmers
Pair Trading with Dow Jones and Farmers
The main advantage of trading using opposite Dow Jones and Farmers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Farmers 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 Farmers will offset losses from the drop in Farmers' 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 |
| Farmers vs. First National Bank | Farmers vs. Farmers Merchants Bancorp | Farmers vs. Exchange Bank | Farmers vs. First National of |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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