Correlation Between Dow Jones and INTERNATIONAL ENERGY
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By analyzing existing cross correlation between Dow Jones Industrial and INTERNATIONAL ENERGY INSURANCE, you can compare the effects of market volatilities on Dow Jones and INTERNATIONAL ENERGY 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 INTERNATIONAL ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and INTERNATIONAL ENERGY.
Diversification Opportunities for Dow Jones and INTERNATIONAL ENERGY
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and INTERNATIONAL is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and INTERNATIONAL ENERGY INSURANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERNATIONAL ENERGY 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 INTERNATIONAL ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTERNATIONAL ENERGY has no effect on the direction of Dow Jones i.e., Dow Jones and INTERNATIONAL ENERGY go up and down completely randomly.
Pair Corralation between Dow Jones and INTERNATIONAL ENERGY
Assuming the 90 days trading horizon Dow Jones is expected to generate 3.88 times less return on investment than INTERNATIONAL ENERGY. But when comparing it to its historical volatility, Dow Jones Industrial is 6.02 times less risky than INTERNATIONAL ENERGY. It trades about 0.08 of its potential returns per unit of risk. INTERNATIONAL ENERGY INSURANCE is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 139.00 in INTERNATIONAL ENERGY INSURANCE on November 3, 2024 and sell it today you would earn a total of 54.00 from holding INTERNATIONAL ENERGY INSURANCE or generate 38.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.39% |
| Values | Daily Returns |
Dow Jones Industrial vs. INTERNATIONAL ENERGY INSURANCE
Performance |
| Timeline |
Dow Jones and INTERNATIONAL ENERGY Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
INTERNATIONAL ENERGY INSURANCE
Pair trading matchups for INTERNATIONAL ENERGY
Pair Trading with Dow Jones and INTERNATIONAL ENERGY
The main advantage of trading using opposite Dow Jones and INTERNATIONAL ENERGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, INTERNATIONAL ENERGY 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 INTERNATIONAL ENERGY will offset losses from the drop in INTERNATIONAL ENERGY's long position.| Dow Jones vs. Rambler Metals and | Dow Jones vs. Nicola Mining | Dow Jones vs. Old Dominion Freight | Dow Jones vs. United Guardian |
| INTERNATIONAL ENERGY vs. FIDELITY BANK PLC | INTERNATIONAL ENERGY vs. AXAMANSARD INSURANCE PLC | INTERNATIONAL ENERGY vs. STANDARD ALLIANCE INSURANCE | INTERNATIONAL ENERGY vs. CORNERSTONE INSURANCE PLC |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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