Correlation Between Dow Jones and Retail Food
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Retail Food 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 Retail Food 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 Retail Food Group, you can compare the effects of market volatilities on Dow Jones and Retail Food 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 Retail Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Retail Food.
Diversification Opportunities for Dow Jones and Retail Food
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dow and Retail is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Retail Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retail Food Group 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 Retail Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retail Food Group has no effect on the direction of Dow Jones i.e., Dow Jones and Retail Food go up and down completely randomly.
Pair Corralation between Dow Jones and Retail Food
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.98 times less return on investment than Retail Food. But when comparing it to its historical volatility, Dow Jones Industrial is 2.95 times less risky than Retail Food. It trades about 0.26 of its potential returns per unit of risk. Retail Food Group is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 6.60 in Retail Food Group on August 29, 2024 and sell it today you would earn a total of 0.70 from holding Retail Food Group or generate 10.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Dow Jones Industrial vs. Retail Food Group
Performance |
| Timeline |
Dow Jones and Retail Food Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Retail Food Group
Pair trading matchups for Retail Food
Pair Trading with Dow Jones and Retail Food
The main advantage of trading using opposite Dow Jones and Retail Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Retail Food 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 Retail Food will offset losses from the drop in Retail Food's long position.| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
| Retail Food vs. Autosports Group | Retail Food vs. AiMedia Technologies | Retail Food vs. BKI Investment | Retail Food vs. ARN Media Limited |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |