Correlation Between Dow Jones and Jpmorgan Emerging
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Jpmorgan Emerging 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 Jpmorgan Emerging 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 Jpmorgan Emerging Markets, you can compare the effects of market volatilities on Dow Jones and Jpmorgan Emerging 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 Jpmorgan Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Jpmorgan Emerging.
Diversification Opportunities for Dow Jones and Jpmorgan Emerging
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dow and Jpmorgan is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Jpmorgan Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Emerging Markets 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 Jpmorgan Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Emerging Markets has no effect on the direction of Dow Jones i.e., Dow Jones and Jpmorgan Emerging go up and down completely randomly.
Pair Corralation between Dow Jones and Jpmorgan Emerging
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.29 times more return on investment than Jpmorgan Emerging. However, Dow Jones is 1.29 times more volatile than Jpmorgan Emerging Markets. It trades about 0.37 of its potential returns per unit of risk. Jpmorgan Emerging Markets is currently generating about -0.16 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 Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dow Jones Industrial vs. Jpmorgan Emerging Markets
Performance |
| Timeline |
Dow Jones and Jpmorgan Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Jpmorgan Emerging Markets
Pair trading matchups for Jpmorgan Emerging
Pair Trading with Dow Jones and Jpmorgan Emerging
The main advantage of trading using opposite Dow Jones and Jpmorgan Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Jpmorgan Emerging 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 Jpmorgan Emerging will offset losses from the drop in Jpmorgan Emerging's long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| Jpmorgan Emerging vs. Invesco Gold Special | Jpmorgan Emerging vs. Gamco Global Gold | Jpmorgan Emerging vs. Great West Goldman Sachs | Jpmorgan Emerging vs. Goldman Sachs Clean |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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