Correlation Between Dow Jones and Johcm Emerging
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Johcm 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 Johcm 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 Johcm Emerging Markets, you can compare the effects of market volatilities on Dow Jones and Johcm 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 Johcm Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Johcm Emerging.
Diversification Opportunities for Dow Jones and Johcm Emerging
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Johcm is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Johcm Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johcm 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 Johcm Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johcm Emerging Markets has no effect on the direction of Dow Jones i.e., Dow Jones and Johcm Emerging go up and down completely randomly.
Pair Corralation between Dow Jones and Johcm Emerging
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate about the same return on investment as Johcm Emerging Markets. But, Dow Jones Industrial is 1.02 times less risky than Johcm Emerging. It trades about 0.08 of its potential returns per unit of risk. Johcm Emerging Markets is currently generating about 0.08 per unit of risk. If you would invest 1,098 in Johcm Emerging Markets on September 4, 2024 and sell it today you would earn a total of 349.00 from holding Johcm Emerging Markets or generate 31.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Johcm Emerging Markets
Performance |
| Timeline |
Dow Jones and Johcm Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Johcm Emerging Markets
Pair trading matchups for Johcm Emerging
Pair Trading with Dow Jones and Johcm Emerging
The main advantage of trading using opposite Dow Jones and Johcm Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Johcm 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 Johcm Emerging will offset losses from the drop in Johcm Emerging's long position.| Dow Jones vs. Gentex | Dow Jones vs. American Axle Manufacturing | Dow Jones vs. Pearson PLC ADR | Dow Jones vs. Marine Products |
| Johcm Emerging vs. Ms Global Fixed | Johcm Emerging vs. The Hartford Equity | Johcm Emerging vs. Calamos Global Equity | Johcm Emerging vs. Gmo Global Equity |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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