Correlation Between Dow Jones and Johcm International
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Johcm International 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 Johcm International 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 Johcm International Select, you can compare the effects of market volatilities on Dow Jones and Johcm International 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 Johcm International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Johcm International.
Diversification Opportunities for Dow Jones and Johcm International
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Johcm is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Johcm International Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johcm International 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 Johcm International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johcm International has no effect on the direction of Dow Jones i.e., Dow Jones and Johcm International go up and down completely randomly.
Pair Corralation between Dow Jones and Johcm International
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.39 times more return on investment than Johcm International. However, Dow Jones is 1.39 times more volatile than Johcm International Select. It trades about 0.24 of its potential returns per unit of risk. Johcm International Select is currently generating about -0.33 per unit of risk. If you would invest 4,211,440 in Dow Jones Industrial on August 26, 2024 and sell it today you would earn a total of 218,211 from holding Dow Jones Industrial or generate 5.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Johcm International Select
Performance |
| Timeline |
Dow Jones and Johcm International Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Johcm International Select
Pair trading matchups for Johcm International
Pair Trading with Dow Jones and Johcm International
The main advantage of trading using opposite Dow Jones and Johcm International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Johcm International 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 Johcm International will offset losses from the drop in Johcm International's long position.| Dow Jones vs. MI Homes | Dow Jones vs. Franklin Street Properties | Dow Jones vs. Summit Hotel Properties | Dow Jones vs. Portillos |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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