Correlation Between Dow Jones and FUTURETECH
Can any of the company-specific risk be diversified away by investing in both Dow Jones and FUTURETECH 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 FUTURETECH 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 FUTURETECH II ACQUISITION, you can compare the effects of market volatilities on Dow Jones and FUTURETECH 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 FUTURETECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and FUTURETECH.
Diversification Opportunities for Dow Jones and FUTURETECH
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dow and FUTURETECH is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and FUTURETECH II ACQUISITION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FUTURETECH II ACQUISITION 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 FUTURETECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FUTURETECH II ACQUISITION has no effect on the direction of Dow Jones i.e., Dow Jones and FUTURETECH go up and down completely randomly.
Pair Corralation between Dow Jones and FUTURETECH
Assuming the 90 days trading horizon Dow Jones is expected to generate 304.68 times less return on investment than FUTURETECH. But when comparing it to its historical volatility, Dow Jones Industrial is 255.51 times less risky than FUTURETECH. It trades about 0.12 of its potential returns per unit of risk. FUTURETECH II ACQUISITION is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 8.93 in FUTURETECH II ACQUISITION on September 3, 2024 and sell it today you would lose (8.93) from holding FUTURETECH II ACQUISITION or give up 100.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 20.97% |
| Values | Daily Returns |
Dow Jones Industrial vs. FUTURETECH II ACQUISITION
Performance |
| Timeline |
Dow Jones and FUTURETECH Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
FUTURETECH II ACQUISITION
Pair trading matchups for FUTURETECH
Pair Trading with Dow Jones and FUTURETECH
The main advantage of trading using opposite Dow Jones and FUTURETECH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, FUTURETECH 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 FUTURETECH will offset losses from the drop in FUTURETECH's long position.| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
| FUTURETECH vs. Alpha One | FUTURETECH vs. Manaris Corp | FUTURETECH vs. SCOR PK | FUTURETECH vs. Aquagold International |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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