Correlation Between Dow Jones and Fresh2
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Fresh2 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 Fresh2 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 Fresh2 Group, you can compare the effects of market volatilities on Dow Jones and Fresh2 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 Fresh2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Fresh2.
Diversification Opportunities for Dow Jones and Fresh2
Excellent diversification
The 3 months correlation between Dow and Fresh2 is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Fresh2 Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresh2 Group 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 Fresh2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresh2 Group has no effect on the direction of Dow Jones i.e., Dow Jones and Fresh2 go up and down completely randomly.
Pair Corralation between Dow Jones and Fresh2
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.08 times more return on investment than Fresh2. However, Dow Jones Industrial is 13.14 times less risky than Fresh2. It trades about 0.08 of its potential returns per unit of risk. Fresh2 Group is currently generating about -0.04 per unit of risk. If you would invest 3,418,997 in Dow Jones Industrial on September 3, 2024 and sell it today you would earn a total of 1,072,068 from holding Dow Jones Industrial or generate 31.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Fresh2 Group
Performance |
| Timeline |
Dow Jones and Fresh2 Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Fresh2 Group
Pair trading matchups for Fresh2
Pair Trading with Dow Jones and Fresh2
The main advantage of trading using opposite Dow Jones and Fresh2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Fresh2 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 Fresh2 will offset losses from the drop in Fresh2's long position.| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
| Fresh2 vs. Crinetics Pharmaceuticals | Fresh2 vs. Viridian Therapeutics | Fresh2 vs. Cytokinetics | Fresh2 vs. Structure Therapeutics American |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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