Correlation Between Dow Jones and Johnson Core
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Johnson Core 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 Johnson Core 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 Johnson Core Plus, you can compare the effects of market volatilities on Dow Jones and Johnson Core 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 Johnson Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Johnson Core.
Diversification Opportunities for Dow Jones and Johnson Core
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dow and Johnson is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Johnson Core Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Core Plus 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 Johnson Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Core Plus has no effect on the direction of Dow Jones i.e., Dow Jones and Johnson Core go up and down completely randomly.
Pair Corralation between Dow Jones and Johnson Core
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 2.31 times more return on investment than Johnson Core. However, Dow Jones is 2.31 times more volatile than Johnson Core Plus. It trades about 0.34 of its potential returns per unit of risk. Johnson Core Plus is currently generating about 0.16 per unit of risk. If you would invest 4,205,219 in Dow Jones Industrial on September 2, 2024 and sell it today you would earn a total of 285,846 from holding Dow Jones Industrial or generate 6.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Johnson Core Plus
Performance |
| Timeline |
Dow Jones and Johnson Core Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Johnson Core Plus
Pair trading matchups for Johnson Core
Pair Trading with Dow Jones and Johnson Core
The main advantage of trading using opposite Dow Jones and Johnson Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Johnson Core 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 Johnson Core will offset losses from the drop in Johnson Core's long position.| Dow Jones vs. Dream Finders Homes | Dow Jones vs. GEN Restaurant Group, | Dow Jones vs. National Beverage Corp | Dow Jones vs. BJs Restaurants |
| Johnson Core vs. Johnson Enhanced Return | Johnson Core vs. Johnson Equity Income | Johnson Core vs. Johnson Equity Income | Johnson Core vs. Johnson Mutual Funds |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |