Correlation Between Dow Jones and Inpex
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Inpex 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 Inpex 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 Inpex, you can compare the effects of market volatilities on Dow Jones and Inpex 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 Inpex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Inpex.
Diversification Opportunities for Dow Jones and Inpex
Weak diversification
The 3 months correlation between Dow and Inpex is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Inpex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inpex 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 Inpex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inpex has no effect on the direction of Dow Jones i.e., Dow Jones and Inpex go up and down completely randomly.
Pair Corralation between Dow Jones and Inpex
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the Inpex. But the index apears to be less risky and, when comparing its historical volatility, Dow Jones Industrial is 7.09 times less risky than Inpex. The index trades about -0.21 of its potential returns per unit of risk. The Inpex is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,210 in Inpex on November 28, 2024 and sell it today you would lose (44.00) from holding Inpex or give up 3.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dow Jones Industrial vs. Inpex
Performance |
| Timeline |
Dow Jones and Inpex Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Inpex
Pair trading matchups for Inpex
Pair Trading with Dow Jones and Inpex
The main advantage of trading using opposite Dow Jones and Inpex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Inpex 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 Inpex will offset losses from the drop in Inpex's long position.| Dow Jones vs. Gladstone Investment | Dow Jones vs. BW Offshore Limited | Dow Jones vs. Fidus Investment Corp | Dow Jones vs. Aperture Health |
| Inpex vs. Gulf Keystone Petroleum | Inpex vs. CGX Energy | Inpex vs. Granite Ridge Resources | Inpex vs. GeoPark |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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