Correlation Between Dow Jones and Macfarlane Group
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Macfarlane Group 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 Macfarlane Group 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 Macfarlane Group PLC, you can compare the effects of market volatilities on Dow Jones and Macfarlane Group 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 Macfarlane Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Macfarlane Group.
Diversification Opportunities for Dow Jones and Macfarlane Group
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Dow and Macfarlane is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Macfarlane Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macfarlane Group PLC 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 Macfarlane Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macfarlane Group PLC has no effect on the direction of Dow Jones i.e., Dow Jones and Macfarlane Group go up and down completely randomly.
Pair Corralation between Dow Jones and Macfarlane Group
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.51 times more return on investment than Macfarlane Group. However, Dow Jones Industrial is 1.95 times less risky than Macfarlane Group. It trades about 0.16 of its potential returns per unit of risk. Macfarlane Group PLC is currently generating about -0.06 per unit of risk. If you would invest 3,880,733 in Dow Jones Industrial on September 3, 2024 and sell it today you would earn a total of 610,332 from holding Dow Jones Industrial or generate 15.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.66% |
| Values | Daily Returns |
Dow Jones Industrial vs. Macfarlane Group PLC
Performance |
| Timeline |
Dow Jones and Macfarlane Group Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Macfarlane Group PLC
Pair trading matchups for Macfarlane Group
Pair Trading with Dow Jones and Macfarlane Group
The main advantage of trading using opposite Dow Jones and Macfarlane Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Macfarlane Group 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 Macfarlane Group will offset losses from the drop in Macfarlane Group's long position.| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
| Macfarlane Group vs. Lundin Mining Corp | Macfarlane Group vs. Anglesey Mining | Macfarlane Group vs. Abingdon Health Plc | Macfarlane Group vs. Worldwide Healthcare Trust |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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