Correlation Between Dow Jones and FIRST MUTUAL
Can any of the company-specific risk be diversified away by investing in both Dow Jones and FIRST MUTUAL 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 FIRST MUTUAL 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 FIRST MUTUAL HOLDINGS, you can compare the effects of market volatilities on Dow Jones and FIRST MUTUAL 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 FIRST MUTUAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and FIRST MUTUAL.
Diversification Opportunities for Dow Jones and FIRST MUTUAL
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and FIRST is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and FIRST MUTUAL HOLDINGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIRST MUTUAL HOLDINGS 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 FIRST MUTUAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIRST MUTUAL HOLDINGS has no effect on the direction of Dow Jones i.e., Dow Jones and FIRST MUTUAL go up and down completely randomly.
Pair Corralation between Dow Jones and FIRST MUTUAL
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.44 times more return on investment than FIRST MUTUAL. However, Dow Jones is 1.44 times more volatile than FIRST MUTUAL HOLDINGS. It trades about 0.27 of its potential returns per unit of risk. FIRST MUTUAL HOLDINGS is currently generating about 0.31 per unit of risk. If you would invest 4,223,305 in Dow Jones Industrial on August 30, 2024 and sell it today you would earn a total of 248,901 from holding Dow Jones Industrial or generate 5.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Dow Jones Industrial vs. FIRST MUTUAL HOLDINGS
Performance |
| Timeline |
Dow Jones and FIRST MUTUAL Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
FIRST MUTUAL HOLDINGS
Pair trading matchups for FIRST MUTUAL
Pair Trading with Dow Jones and FIRST MUTUAL
The main advantage of trading using opposite Dow Jones and FIRST MUTUAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, FIRST MUTUAL 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 FIRST MUTUAL will offset losses from the drop in FIRST MUTUAL's long position.| Dow Jones vs. Skillful Craftsman Education | Dow Jones vs. Acco Brands | Dow Jones vs. Cracker Barrel Old | Dow Jones vs. Coursera |
| FIRST MUTUAL vs. FIRST MUTUAL PROPERTIES | FIRST MUTUAL vs. STAR AFRICA PORATION | FIRST MUTUAL vs. CAFCA LIMITED | FIRST MUTUAL vs. AFRICAN DISTILLERS LIMITED |
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 CEOs Directory module to screen CEOs from public companies around the world.
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