Correlation Between Dow Jones and Iffe Futura
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Iffe Futura 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 Iffe Futura 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 Iffe Futura SA, you can compare the effects of market volatilities on Dow Jones and Iffe Futura 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 Iffe Futura. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Iffe Futura.
Diversification Opportunities for Dow Jones and Iffe Futura
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dow and Iffe is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Iffe Futura SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iffe Futura SA 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 Iffe Futura. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iffe Futura SA has no effect on the direction of Dow Jones i.e., Dow Jones and Iffe Futura go up and down completely randomly.
Pair Corralation between Dow Jones and Iffe Futura
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.79 times less return on investment than Iffe Futura. But when comparing it to its historical volatility, Dow Jones Industrial is 1.87 times less risky than Iffe Futura. It trades about 0.34 of its potential returns per unit of risk. Iffe Futura SA is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 62.00 in Iffe Futura SA on September 2, 2024 and sell it today you would earn a total of 8.00 from holding Iffe Futura SA or generate 12.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dow Jones Industrial vs. Iffe Futura SA
Performance |
| Timeline |
Dow Jones and Iffe Futura Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Iffe Futura SA
Pair trading matchups for Iffe Futura
Pair Trading with Dow Jones and Iffe Futura
The main advantage of trading using opposite Dow Jones and Iffe Futura positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Iffe Futura 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 Iffe Futura will offset losses from the drop in Iffe Futura's long position.| Dow Jones vs. Dream Finders Homes | Dow Jones vs. GEN Restaurant Group, | Dow Jones vs. National Beverage Corp | Dow Jones vs. BJs Restaurants |
| Iffe Futura vs. Metrovacesa SA | Iffe Futura vs. Elecnor SA | Iffe Futura vs. Mapfre | Iffe Futura vs. Amper SA |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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