Correlation Between Dow Jones and 345397ZR7
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By analyzing existing cross correlation between Dow Jones Industrial and Ford Motor Credit, you can compare the effects of market volatilities on Dow Jones and 345397ZR7 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 345397ZR7. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and 345397ZR7.
Diversification Opportunities for Dow Jones and 345397ZR7
Excellent diversification
The 3 months correlation between Dow and 345397ZR7 is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Ford Motor Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ford Motor Credit 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 345397ZR7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ford Motor Credit has no effect on the direction of Dow Jones i.e., Dow Jones and 345397ZR7 go up and down completely randomly.
Pair Corralation between Dow Jones and 345397ZR7
Assuming the 90 days trading horizon Dow Jones is expected to generate 30.95 times less return on investment than 345397ZR7. But when comparing it to its historical volatility, Dow Jones Industrial is 62.77 times less risky than 345397ZR7. It trades about 0.08 of its potential returns per unit of risk. Ford Motor Credit is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 9,450 in Ford Motor Credit on September 2, 2024 and sell it today you would lose (425.00) from holding Ford Motor Credit or give up 4.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Dow Jones Industrial vs. Ford Motor Credit
Performance |
| Timeline |
Dow Jones and 345397ZR7 Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Ford Motor Credit
Pair trading matchups for 345397ZR7
Pair Trading with Dow Jones and 345397ZR7
The main advantage of trading using opposite Dow Jones and 345397ZR7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, 345397ZR7 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 345397ZR7 will offset losses from the drop in 345397ZR7's long position.| Dow Jones vs. Dream Finders Homes | Dow Jones vs. GEN Restaurant Group, | Dow Jones vs. National Beverage Corp | Dow Jones vs. BJs Restaurants |
| 345397ZR7 vs. AEP TEX INC | 345397ZR7 vs. US BANK NATIONAL | 345397ZR7 vs. American Express | 345397ZR7 vs. Chevron Corp |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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