Correlation Between Dow Jones and IDEX
Can any of the company-specific risk be diversified away by investing in both Dow Jones and IDEX 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 IDEX 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 IDEX Corporation, you can compare the effects of market volatilities on Dow Jones and IDEX 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 IDEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and IDEX.
Diversification Opportunities for Dow Jones and IDEX
Very poor diversification
The 3 months correlation between Dow and IDEX is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and IDEX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDEX 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 IDEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDEX has no effect on the direction of Dow Jones i.e., Dow Jones and IDEX go up and down completely randomly.
Pair Corralation between Dow Jones and IDEX
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.55 times more return on investment than IDEX. However, Dow Jones Industrial is 1.82 times less risky than IDEX. It trades about 0.08 of its potential returns per unit of risk. IDEX Corporation is currently generating about 0.01 per unit of risk. If you would invest 3,359,634 in Dow Jones Industrial on August 27, 2024 and sell it today you would earn a total of 1,070,017 from holding Dow Jones Industrial or generate 31.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. IDEX Corp.
Performance |
| Timeline |
Dow Jones and IDEX Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
IDEX Corporation
Pair trading matchups for IDEX
Pair Trading with Dow Jones and IDEX
The main advantage of trading using opposite Dow Jones and IDEX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, IDEX 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 IDEX will offset losses from the drop in IDEX'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 |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |