Correlation Between Dow Jones and COLGATE
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By analyzing existing cross correlation between Dow Jones Industrial and COLGATE PALMOLIVE MEDIUM TERM, you can compare the effects of market volatilities on Dow Jones and COLGATE 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 COLGATE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and COLGATE.
Diversification Opportunities for Dow Jones and COLGATE
Good diversification
The 3 months correlation between Dow and COLGATE is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and COLGATE PALMOLIVE MEDIUM TERM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COLGATE PALMOLIVE 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 COLGATE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COLGATE PALMOLIVE has no effect on the direction of Dow Jones i.e., Dow Jones and COLGATE go up and down completely randomly.
Pair Corralation between Dow Jones and COLGATE
Assuming the 90 days trading horizon Dow Jones is expected to generate 86.64 times less return on investment than COLGATE. But when comparing it to its historical volatility, Dow Jones Industrial is 129.19 times less risky than COLGATE. It trades about 0.12 of its potential returns per unit of risk. COLGATE PALMOLIVE MEDIUM TERM is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 9,033 in COLGATE PALMOLIVE MEDIUM TERM on August 31, 2024 and sell it today you would lose (334.00) from holding COLGATE PALMOLIVE MEDIUM TERM or give up 3.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 71.12% |
| Values | Daily Returns |
Dow Jones Industrial vs. COLGATE PALMOLIVE MEDIUM TERM
Performance |
| Timeline |
Dow Jones and COLGATE Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
COLGATE PALMOLIVE MEDIUM TERM
Pair trading matchups for COLGATE
Pair Trading with Dow Jones and COLGATE
The main advantage of trading using opposite Dow Jones and COLGATE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, COLGATE 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 COLGATE will offset losses from the drop in COLGATE's long position.| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
| COLGATE vs. AEP TEX INC | COLGATE vs. US BANK NATIONAL | COLGATE vs. Bank of America | COLGATE vs. GE Aerospace |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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