Correlation Between Dow Jones and Tractor Supply
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Tractor Supply 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 Tractor Supply 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 Tractor Supply, you can compare the effects of market volatilities on Dow Jones and Tractor Supply 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 Tractor Supply. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Tractor Supply.
Diversification Opportunities for Dow Jones and Tractor Supply
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dow and Tractor is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Tractor Supply in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tractor Supply 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 Tractor Supply. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tractor Supply has no effect on the direction of Dow Jones i.e., Dow Jones and Tractor Supply go up and down completely randomly.
Pair Corralation between Dow Jones and Tractor Supply
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the Tractor Supply. But the index apears to be less risky and, when comparing its historical volatility, Dow Jones Industrial is 2.05 times less risky than Tractor Supply. The index trades about -0.3 of its potential returns per unit of risk. The Tractor Supply is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 5,353 in Tractor Supply on September 24, 2024 and sell it today you would lose (213.00) from holding Tractor Supply or give up 3.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Dow Jones Industrial vs. Tractor Supply
Performance |
| Timeline |
Dow Jones and Tractor Supply Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Tractor Supply
Pair trading matchups for Tractor Supply
Pair Trading with Dow Jones and Tractor Supply
The main advantage of trading using opposite Dow Jones and Tractor Supply positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Tractor Supply 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 Tractor Supply will offset losses from the drop in Tractor Supply's long position.| Dow Jones vs. Teleflex Incorporated | Dow Jones vs. Sonida Senior Living | Dow Jones vs. Avadel Pharmaceuticals PLC | Dow Jones vs. Cardinal Health |
| Tractor Supply vs. MercadoLibre | Tractor Supply vs. OReilly Automotive | Tractor Supply vs. AutoZone | Tractor Supply vs. Ulta Beauty |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Stocks Directory Find actively traded stocks across global markets | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |