Correlation Between Dow Jones and Frasers Logistics
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Frasers Logistics 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 Frasers Logistics 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 Frasers Logistics Commercial, you can compare the effects of market volatilities on Dow Jones and Frasers Logistics 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 Frasers Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Frasers Logistics.
Diversification Opportunities for Dow Jones and Frasers Logistics
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Frasers is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Frasers Logistics Commercial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frasers Logistics 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 Frasers Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frasers Logistics has no effect on the direction of Dow Jones i.e., Dow Jones and Frasers Logistics go up and down completely randomly.
Pair Corralation between Dow Jones and Frasers Logistics
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.32 times more return on investment than Frasers Logistics. However, Dow Jones Industrial is 3.14 times less risky than Frasers Logistics. It trades about 0.38 of its potential returns per unit of risk. Frasers Logistics Commercial is currently generating about -0.22 per unit of risk. If you would invest 4,179,460 in Dow Jones Industrial on September 3, 2024 and sell it today you would earn a total of 311,605 from holding Dow Jones Industrial or generate 7.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Dow Jones Industrial vs. Frasers Logistics Commercial
Performance |
| Timeline |
Dow Jones and Frasers Logistics Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Frasers Logistics Commercial
Pair trading matchups for Frasers Logistics
Pair Trading with Dow Jones and Frasers Logistics
The main advantage of trading using opposite Dow Jones and Frasers Logistics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Frasers Logistics 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 Frasers Logistics will offset losses from the drop in Frasers Logistics' long position.| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
| Frasers Logistics vs. Palo Alto Networks | Frasers Logistics vs. Singular Genomics Systems | Frasers Logistics vs. BlackRock | Frasers Logistics vs. Deckers Outdoor |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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