Correlation Between Dow Jones and ICF International
Can any of the company-specific risk be diversified away by investing in both Dow Jones and ICF International 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 ICF International 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 ICF International, you can compare the effects of market volatilities on Dow Jones and ICF International 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 ICF International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and ICF International.
Diversification Opportunities for Dow Jones and ICF International
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and ICF is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and ICF International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICF International 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 ICF International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICF International has no effect on the direction of Dow Jones i.e., Dow Jones and ICF International go up and down completely randomly.
Pair Corralation between Dow Jones and ICF International
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.1 times less return on investment than ICF International. But when comparing it to its historical volatility, Dow Jones Industrial is 2.35 times less risky than ICF International. It trades about 0.08 of its potential returns per unit of risk. ICF International is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 10,491 in ICF International on August 28, 2024 and sell it today you would earn a total of 3,061 from holding ICF International or generate 29.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. ICF International
Performance |
| Timeline |
Dow Jones and ICF International Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
ICF International
Pair trading matchups for ICF International
Pair Trading with Dow Jones and ICF International
The main advantage of trading using opposite Dow Jones and ICF International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, ICF International 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 ICF International will offset losses from the drop in ICF International's long position.| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
| ICF International vs. Forrester Research | ICF International vs. Huron Consulting Group | ICF International vs. Franklin Covey | ICF International vs. FTI Consulting |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |