Correlation Between Dow Jones and IGI Life
Can any of the company-specific risk be diversified away by investing in both Dow Jones and IGI Life 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 IGI Life 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 IGI Life Insurance, you can compare the effects of market volatilities on Dow Jones and IGI Life 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 IGI Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and IGI Life.
Diversification Opportunities for Dow Jones and IGI Life
Average diversification
The 3 months correlation between Dow and IGI is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and IGI Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGI Life Insurance 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 IGI Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IGI Life Insurance has no effect on the direction of Dow Jones i.e., Dow Jones and IGI Life go up and down completely randomly.
Pair Corralation between Dow Jones and IGI Life
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.23 times more return on investment than IGI Life. However, Dow Jones Industrial is 4.38 times less risky than IGI Life. It trades about 0.14 of its potential returns per unit of risk. IGI Life Insurance is currently generating about -0.07 per unit of risk. If you would invest 4,329,703 in Dow Jones Industrial on October 25, 2024 and sell it today you would earn a total of 85,970 from holding Dow Jones Industrial or generate 1.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. IGI Life Insurance
Performance |
| Timeline |
Dow Jones and IGI Life Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
IGI Life Insurance
Pair trading matchups for IGI Life
Pair Trading with Dow Jones and IGI Life
The main advantage of trading using opposite Dow Jones and IGI Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, IGI Life 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 IGI Life will offset losses from the drop in IGI Life's long position.| Dow Jones vs. Xiabuxiabu Catering Management | Dow Jones vs. Neogen | Dow Jones vs. Orion Office Reit | Dow Jones vs. Bassett Furniture Industries |
| IGI Life vs. TPL Insurance | IGI Life vs. Engro Polymer Chemicals | IGI Life vs. Sardar Chemical Industries | IGI Life vs. Sitara Chemical Industries |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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