Correlation Between Dow Jones and Lee Feed
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Lee Feed 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 Lee Feed 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 Lee Feed Mill, you can compare the effects of market volatilities on Dow Jones and Lee Feed 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 Lee Feed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Lee Feed.
Diversification Opportunities for Dow Jones and Lee Feed
Average diversification
The 3 months correlation between Dow and Lee is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Lee Feed Mill in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lee Feed Mill 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 Lee Feed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lee Feed Mill has no effect on the direction of Dow Jones i.e., Dow Jones and Lee Feed go up and down completely randomly.
Pair Corralation between Dow Jones and Lee Feed
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.1 times more return on investment than Lee Feed. However, Dow Jones is 1.1 times more volatile than Lee Feed Mill. It trades about 0.26 of its potential returns per unit of risk. Lee Feed Mill is currently generating about -0.17 per unit of risk. If you would invest 4,238,757 in Dow Jones Industrial on August 28, 2024 and sell it today you would earn a total of 234,900 from holding Dow Jones Industrial or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Lee Feed Mill
Performance |
| Timeline |
Dow Jones and Lee Feed Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Lee Feed Mill
Pair trading matchups for Lee Feed
Pair Trading with Dow Jones and Lee Feed
The main advantage of trading using opposite Dow Jones and Lee Feed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Lee Feed 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 Lee Feed will offset losses from the drop in Lee Feed's long position.| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
| Lee Feed vs. GFPT Public | Lee Feed vs. KGI Securities Public | Lee Feed vs. Thai Vegetable Oil | Lee Feed vs. Lam Soon Public |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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