Correlation Between Dow Jones and OFS Capital
Can any of the company-specific risk be diversified away by investing in both Dow Jones and OFS Capital 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 OFS Capital 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 OFS Capital Corp, you can compare the effects of market volatilities on Dow Jones and OFS Capital 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 OFS Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and OFS Capital.
Diversification Opportunities for Dow Jones and OFS Capital
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dow and OFS is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and OFS Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFS Capital Corp 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 OFS Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFS Capital Corp has no effect on the direction of Dow Jones i.e., Dow Jones and OFS Capital go up and down completely randomly.
Pair Corralation between Dow Jones and OFS Capital
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.66 times more return on investment than OFS Capital. However, Dow Jones is 1.66 times more volatile than OFS Capital Corp. It trades about 0.22 of its potential returns per unit of risk. OFS Capital Corp is currently generating about 0.0 per unit of risk. If you would invest 4,238,757 in Dow Jones Industrial on August 27, 2024 and sell it today you would earn a total of 190,894 from holding Dow Jones Industrial or generate 4.5% 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. OFS Capital Corp
Performance |
| Timeline |
Dow Jones and OFS Capital Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
OFS Capital Corp
Pair trading matchups for OFS Capital
Pair Trading with Dow Jones and OFS Capital
The main advantage of trading using opposite Dow Jones and OFS Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, OFS Capital 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 OFS Capital will offset losses from the drop in OFS Capital'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 |
| OFS Capital vs. Stellus Capital Investment | OFS Capital vs. Fidus Investment Corp | OFS Capital vs. Monroe Capital Corp | OFS Capital vs. New Mountain Finance |
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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