Correlation Between Dow Jones and Israel Land
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Israel Land 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 Israel Land 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 Israel Land Development, you can compare the effects of market volatilities on Dow Jones and Israel Land 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 Israel Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Israel Land.
Diversification Opportunities for Dow Jones and Israel Land
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dow and Israel is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Israel Land Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Israel Land Development 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 Israel Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Israel Land Development has no effect on the direction of Dow Jones i.e., Dow Jones and Israel Land go up and down completely randomly.
Pair Corralation between Dow Jones and Israel Land
Assuming the 90 days trading horizon Dow Jones is expected to generate 2.44 times less return on investment than Israel Land. But when comparing it to its historical volatility, Dow Jones Industrial is 4.79 times less risky than Israel Land. It trades about 0.08 of its potential returns per unit of risk. Israel Land Development is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 55,800 in Israel Land Development on August 29, 2024 and sell it today you would earn a total of 22,080 from holding Israel Land Development or generate 39.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 77.78% |
| Values | Daily Returns |
Dow Jones Industrial vs. Israel Land Development
Performance |
| Timeline |
Dow Jones and Israel Land Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Israel Land Development
Pair trading matchups for Israel Land
Pair Trading with Dow Jones and Israel Land
The main advantage of trading using opposite Dow Jones and Israel Land positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Israel Land 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 Israel Land will offset losses from the drop in Israel Land's long position.| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
| Israel Land vs. OPC Energy | Israel Land vs. Delek Group | Israel Land vs. Lapidoth | Israel Land vs. Naphtha |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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