Correlation Between Dow Jones and Fremont Gold
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Fremont 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 Fremont 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 Fremont Gold, you can compare the effects of market volatilities on Dow Jones and Fremont 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 Fremont Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Fremont Gold.
Diversification Opportunities for Dow Jones and Fremont Gold
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and Fremont is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Fremont Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fremont Gold 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 Fremont Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fremont Gold has no effect on the direction of Dow Jones i.e., Dow Jones and Fremont Gold go up and down completely randomly.
Pair Corralation between Dow Jones and Fremont Gold
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the Fremont Gold. In addition to that, Dow Jones is 2.47 times more volatile than Fremont Gold. It trades about -0.19 of its total potential returns per unit of risk. Fremont Gold is currently generating about 0.58 per unit of volatility. If you would invest 9.26 in Fremont Gold on November 28, 2024 and sell it today you would earn a total of 0.04 from holding Fremont Gold or generate 0.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 14.29% |
| Values | Daily Returns |
Dow Jones Industrial vs. Fremont Gold
Performance |
| Timeline |
Dow Jones and Fremont Gold Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Fremont Gold
Pair trading matchups for Fremont Gold
Pair Trading with Dow Jones and Fremont Gold
The main advantage of trading using opposite Dow Jones and Fremont Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Fremont 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 Fremont Gold will offset losses from the drop in Fremont Gold's long position.| Dow Jones vs. Gladstone Investment | Dow Jones vs. BW Offshore Limited | Dow Jones vs. Fidus Investment Corp | Dow Jones vs. Aperture Health |
| Fremont Gold vs. Altamira Gold Corp | Fremont Gold vs. Rio2 Limited | Fremont Gold vs. Novo Resources Corp | Fremont Gold vs. Lion One Metals |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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