Correlation Between Dow Jones and Reitmans
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Reitmans 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 Reitmans 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 Reitmans Limited, you can compare the effects of market volatilities on Dow Jones and Reitmans 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 Reitmans. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Reitmans.
Diversification Opportunities for Dow Jones and Reitmans
Weak diversification
The 3 months correlation between Dow and Reitmans is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Reitmans Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reitmans Limited 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 Reitmans. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reitmans Limited has no effect on the direction of Dow Jones i.e., Dow Jones and Reitmans go up and down completely randomly.
Pair Corralation between Dow Jones and Reitmans
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the Reitmans. But the index apears to be less risky and, when comparing its historical volatility, Dow Jones Industrial is 2.24 times less risky than Reitmans. The index trades about -0.01 of its potential returns per unit of risk. The Reitmans Limited is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 254.00 in Reitmans Limited on September 14, 2024 and sell it today you would earn a total of 1.00 from holding Reitmans Limited or generate 0.39% 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. Reitmans Limited
Performance |
| Timeline |
Dow Jones and Reitmans Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Reitmans Limited
Pair trading matchups for Reitmans
Pair Trading with Dow Jones and Reitmans
The main advantage of trading using opposite Dow Jones and Reitmans positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Reitmans 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 Reitmans will offset losses from the drop in Reitmans' long position.| Dow Jones vs. Hurco Companies | Dow Jones vs. Tyson Foods | Dow Jones vs. MYR Group | Dow Jones vs. Cannae Holdings |
| Reitmans vs. Canada Goose Holdings | Reitmans vs. Spin Master Corp | Reitmans vs. Aritzia | Reitmans vs. iShares Canadian HYBrid |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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