Correlation Between Dow Jones and ISFELAG HF
Can any of the company-specific risk be diversified away by investing in both Dow Jones and ISFELAG HF 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 ISFELAG HF 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 ISFELAG HF, you can compare the effects of market volatilities on Dow Jones and ISFELAG HF 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 ISFELAG HF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and ISFELAG HF.
Diversification Opportunities for Dow Jones and ISFELAG HF
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and ISFELAG is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and ISFELAG HF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ISFELAG HF 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 ISFELAG HF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ISFELAG HF has no effect on the direction of Dow Jones i.e., Dow Jones and ISFELAG HF go up and down completely randomly.
Pair Corralation between Dow Jones and ISFELAG HF
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.37 times more return on investment than ISFELAG HF. However, Dow Jones is 1.37 times more volatile than ISFELAG HF. It trades about 0.37 of its potential returns per unit of risk. ISFELAG HF is currently generating about 0.1 per unit of risk. If you would invest 4,176,346 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 314,719 from holding Dow Jones Industrial or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dow Jones Industrial vs. ISFELAG HF
Performance |
| Timeline |
Dow Jones and ISFELAG HF Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
ISFELAG HF
Pair trading matchups for ISFELAG HF
Pair Trading with Dow Jones and ISFELAG HF
The main advantage of trading using opposite Dow Jones and ISFELAG HF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, ISFELAG HF 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 ISFELAG HF will offset losses from the drop in ISFELAG HF's long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| ISFELAG HF vs. Kvika banki hf | ISFELAG HF vs. Icelandair Group hf | ISFELAG HF vs. slandsbanki hf | ISFELAG HF vs. Alvotech |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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