Correlation Between Dow Jones and Rompetrol Rafi
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Rompetrol Rafi 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 Rompetrol Rafi 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 Rompetrol Rafi, you can compare the effects of market volatilities on Dow Jones and Rompetrol Rafi 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 Rompetrol Rafi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Rompetrol Rafi.
Diversification Opportunities for Dow Jones and Rompetrol Rafi
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dow and Rompetrol is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Rompetrol Rafi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rompetrol Rafi 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 Rompetrol Rafi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rompetrol Rafi has no effect on the direction of Dow Jones i.e., Dow Jones and Rompetrol Rafi go up and down completely randomly.
Pair Corralation between Dow Jones and Rompetrol Rafi
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.41 times more return on investment than Rompetrol Rafi. However, Dow Jones Industrial is 2.42 times less risky than Rompetrol Rafi. It trades about 0.08 of its potential returns per unit of risk. Rompetrol Rafi is currently generating about -0.02 per unit of risk. If you would invest 3,394,710 in Dow Jones Industrial on August 26, 2024 and sell it today you would earn a total of 1,034,941 from holding Dow Jones Industrial or generate 30.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.38% |
| Values | Daily Returns |
Dow Jones Industrial vs. Rompetrol Rafi
Performance |
| Timeline |
Dow Jones and Rompetrol Rafi Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Rompetrol Rafi
Pair trading matchups for Rompetrol Rafi
Pair Trading with Dow Jones and Rompetrol Rafi
The main advantage of trading using opposite Dow Jones and Rompetrol Rafi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Rompetrol Rafi 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 Rompetrol Rafi will offset losses from the drop in Rompetrol Rafi's long position.| Dow Jones vs. MI Homes | Dow Jones vs. Franklin Street Properties | Dow Jones vs. Summit Hotel Properties | Dow Jones vs. Portillos |
| Rompetrol Rafi vs. AROBS TRANSILVANIA SOFTWARE | Rompetrol Rafi vs. Digi Communications NV | Rompetrol Rafi vs. GRUPUL INDUSTRIAL ELECTROCONTACT | Rompetrol Rafi vs. Compania Hoteliera InterContinental |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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