Correlation Between Dow Jones and Magyar Bancorp
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Magyar Bancorp 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 Magyar Bancorp 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 Magyar Bancorp, you can compare the effects of market volatilities on Dow Jones and Magyar Bancorp 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 Magyar Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Magyar Bancorp.
Diversification Opportunities for Dow Jones and Magyar Bancorp
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Magyar is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Magyar Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magyar Bancorp 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 Magyar Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magyar Bancorp has no effect on the direction of Dow Jones i.e., Dow Jones and Magyar Bancorp go up and down completely randomly.
Pair Corralation between Dow Jones and Magyar Bancorp
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.34 times less return on investment than Magyar Bancorp. In addition to that, Dow Jones is 1.22 times more volatile than Magyar Bancorp. It trades about 0.26 of its total potential returns per unit of risk. Magyar Bancorp is currently generating about 0.43 per unit of volatility. If you would invest 1,232 in Magyar Bancorp on August 28, 2024 and sell it today you would earn a total of 93.00 from holding Magyar Bancorp or generate 7.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Magyar Bancorp
Performance |
| Timeline |
Dow Jones and Magyar Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Magyar Bancorp
Pair trading matchups for Magyar Bancorp
Pair Trading with Dow Jones and Magyar Bancorp
The main advantage of trading using opposite Dow Jones and Magyar Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Magyar Bancorp 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 Magyar Bancorp will offset losses from the drop in Magyar Bancorp'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 |
| Magyar Bancorp vs. Home Federal Bancorp | Magyar Bancorp vs. Community West Bancshares | Magyar Bancorp vs. First Financial Northwest | Magyar Bancorp vs. First Northwest Bancorp |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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