Correlation Between Dow Jones and FS Bancorp
Can any of the company-specific risk be diversified away by investing in both Dow Jones and FS Bancorp 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 FS Bancorp 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 FS Bancorp, you can compare the effects of market volatilities on Dow Jones and FS Bancorp 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 FS Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and FS Bancorp.
Diversification Opportunities for Dow Jones and FS Bancorp
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dow and FXLG is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and FS Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FS Bancorp 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 FS Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FS Bancorp has no effect on the direction of Dow Jones i.e., Dow Jones and FS Bancorp go up and down completely randomly.
Pair Corralation between Dow Jones and FS Bancorp
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.13 times less return on investment than FS Bancorp. But when comparing it to its historical volatility, Dow Jones Industrial is 3.82 times less risky than FS Bancorp. It trades about 0.08 of its potential returns per unit of risk. FS Bancorp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 3,028 in FS Bancorp on November 2, 2024 and sell it today you would earn a total of 302.00 from holding FS Bancorp or generate 9.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 75.15% |
| Values | Daily Returns |
Dow Jones Industrial vs. FS Bancorp
Performance |
| Timeline |
Dow Jones and FS Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
FS Bancorp
Pair trading matchups for FS Bancorp
Pair Trading with Dow Jones and FS Bancorp
The main advantage of trading using opposite Dow Jones and FS Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, FS Bancorp 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 FS Bancorp will offset losses from the drop in FS Bancorp's long position.| Dow Jones vs. Cincinnati Financial | Dow Jones vs. Kellanova | Dow Jones vs. Acme United | Dow Jones vs. Procter Gamble |
| FS Bancorp vs. Eastern Michigan Financial | FS Bancorp vs. Grand River Commerce | FS Bancorp vs. Bank of Botetourt | FS Bancorp vs. AmeriServ Financial |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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