Correlation Between Dow Jones and PBF Energy
Can any of the company-specific risk be diversified away by investing in both Dow Jones and PBF Energy 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 PBF Energy 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 PBF Energy, you can compare the effects of market volatilities on Dow Jones and PBF Energy 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 PBF Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and PBF Energy.
Diversification Opportunities for Dow Jones and PBF Energy
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and PBF is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and PBF Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PBF Energy 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 PBF Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PBF Energy has no effect on the direction of Dow Jones i.e., Dow Jones and PBF Energy go up and down completely randomly.
Pair Corralation between Dow Jones and PBF Energy
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.3 times more return on investment than PBF Energy. However, Dow Jones Industrial is 3.33 times less risky than PBF Energy. It trades about 0.13 of its potential returns per unit of risk. PBF Energy is currently generating about -0.11 per unit of risk. If you would invest 3,885,286 in Dow Jones Industrial on August 24, 2024 and sell it today you would earn a total of 501,749 from holding Dow Jones Industrial or generate 12.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. PBF Energy
Performance |
| Timeline |
Dow Jones and PBF Energy Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
PBF Energy
Pair trading matchups for PBF Energy
Pair Trading with Dow Jones and PBF Energy
The main advantage of trading using opposite Dow Jones and PBF Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, PBF Energy 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 PBF Energy will offset losses from the drop in PBF Energy's long position.| Dow Jones vs. Barrick Gold Corp | Dow Jones vs. Jutal Offshore Oil | Dow Jones vs. Eastern Co | Dow Jones vs. Weyco Group |
| PBF Energy vs. Delek Energy | PBF Energy vs. CVR Energy | PBF Energy vs. Valero Energy | PBF Energy vs. Marathon Petroleum Corp |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |