Correlation Between Dow Jones and First National
Can any of the company-specific risk be diversified away by investing in both Dow Jones and First National 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 National 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 National Financial, you can compare the effects of market volatilities on Dow Jones and First National 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 National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and First National.
Diversification Opportunities for Dow Jones and First National
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dow and First is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and First National Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First National Financial 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 National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First National Financial has no effect on the direction of Dow Jones i.e., Dow Jones and First National go up and down completely randomly.
Pair Corralation between Dow Jones and First National
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.08 times less return on investment than First National. But when comparing it to its historical volatility, Dow Jones Industrial is 1.28 times less risky than First National. It trades about 0.08 of its potential returns per unit of risk. First National Financial is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,067 in First National Financial on August 30, 2024 and sell it today you would earn a total of 381.00 from holding First National Financial or generate 35.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Dow Jones Industrial vs. First National Financial
Performance |
| Timeline |
Dow Jones and First National Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
First National Financial
Pair trading matchups for First National
Pair Trading with Dow Jones and First National
The main advantage of trading using opposite Dow Jones and First National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, First National 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 National will offset losses from the drop in First National's long position.| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
| First National vs. Walmart Inc CDR | First National vs. Amazon CDR | First National vs. Berkshire Hathaway CDR | First National vs. UnitedHealth Group CDR |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |