Correlation Between Dow Jones and IA Clarington
Can any of the company-specific risk be diversified away by investing in both Dow Jones and IA Clarington 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 IA Clarington 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 IA Clarington Strategic, you can compare the effects of market volatilities on Dow Jones and IA Clarington 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 IA Clarington. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and IA Clarington.
Diversification Opportunities for Dow Jones and IA Clarington
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dow and ISIF is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and IA Clarington Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IA Clarington Strategic 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 IA Clarington. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IA Clarington Strategic has no effect on the direction of Dow Jones i.e., Dow Jones and IA Clarington go up and down completely randomly.
Pair Corralation between Dow Jones and IA Clarington
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 3.07 times more return on investment than IA Clarington. However, Dow Jones is 3.07 times more volatile than IA Clarington Strategic. It trades about 0.26 of its potential returns per unit of risk. IA Clarington Strategic is currently generating about 0.14 per unit of risk. If you would invest 4,238,757 in Dow Jones Industrial on August 29, 2024 and sell it today you would earn a total of 247,274 from holding Dow Jones Industrial or generate 5.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. IA Clarington Strategic
Performance |
| Timeline |
Dow Jones and IA Clarington Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
IA Clarington Strategic
Pair trading matchups for IA Clarington
Pair Trading with Dow Jones and IA Clarington
The main advantage of trading using opposite Dow Jones and IA Clarington positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, IA Clarington 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 IA Clarington will offset losses from the drop in IA Clarington's long position.| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
| IA Clarington vs. IA Clarington Floating | IA Clarington vs. IA Clarington Loomis | IA Clarington vs. IA Clarington Core | IA Clarington vs. Purpose Global Bond |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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