Correlation Between Dow Jones and Phibro Animal
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Phibro Animal 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 Phibro Animal 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 Phibro Animal Health, you can compare the effects of market volatilities on Dow Jones and Phibro Animal 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 Phibro Animal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Phibro Animal.
Diversification Opportunities for Dow Jones and Phibro Animal
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dow and Phibro is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Phibro Animal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phibro Animal Health 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 Phibro Animal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phibro Animal Health has no effect on the direction of Dow Jones i.e., Dow Jones and Phibro Animal go up and down completely randomly.
Pair Corralation between Dow Jones and Phibro Animal
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.35 times more return on investment than Phibro Animal. However, Dow Jones Industrial is 2.88 times less risky than Phibro Animal. It trades about -0.22 of its potential returns per unit of risk. Phibro Animal Health is currently generating about -0.26 per unit of risk. If you would invest 4,424,783 in Dow Jones Industrial on October 11, 2024 and sell it today you would lose (161,263) from holding Dow Jones Industrial or give up 3.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 81.82% |
| Values | Daily Returns |
Dow Jones Industrial vs. Phibro Animal Health
Performance |
| Timeline |
Dow Jones and Phibro Animal Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Phibro Animal Health
Pair trading matchups for Phibro Animal
Pair Trading with Dow Jones and Phibro Animal
The main advantage of trading using opposite Dow Jones and Phibro Animal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Phibro Animal 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 Phibro Animal will offset losses from the drop in Phibro Animal's long position.| Dow Jones vs. Toro | Dow Jones vs. Foot Locker | Dow Jones vs. Abercrombie Fitch | Dow Jones vs. 51Talk Online Education |
| Phibro Animal vs. BII Railway Transportation | Phibro Animal vs. TOREX SEMICONDUCTOR LTD | Phibro Animal vs. COLUMBIA SPORTSWEAR | Phibro Animal vs. USWE SPORTS AB |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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