Correlation Between Domini Impact and Domini International
Can any of the company-specific risk be diversified away by investing in both Domini Impact and Domini International 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 Domini Impact and Domini International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Domini Impact International and Domini International Opportunities, you can compare the effects of market volatilities on Domini Impact and Domini International 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 Domini Impact with a short position of Domini International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Domini Impact and Domini International.
Diversification Opportunities for Domini Impact and Domini International
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DOMINI and Domini is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Domini Impact International and Domini International Opportuni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Domini International and Domini Impact 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 Domini Impact International are associated (or correlated) with Domini International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Domini International has no effect on the direction of Domini Impact i.e., Domini Impact and Domini International go up and down completely randomly.
Pair Corralation between Domini Impact and Domini International
Assuming the 90 days horizon Domini Impact International is expected to generate 1.0 times more return on investment than Domini International. However, Domini Impact International is 1.0 times less risky than Domini International. It trades about 0.13 of its potential returns per unit of risk. Domini International Opportunities is currently generating about -0.03 per unit of risk. If you would invest 909.00 in Domini Impact International on September 1, 2024 and sell it today you would earn a total of 20.00 from holding Domini Impact International or generate 2.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Domini Impact International vs. Domini International Opportuni
Performance |
| Timeline |
| Domini Impact Intern |
| Domini International |
Domini Impact and Domini International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Domini Impact and Domini International
The main advantage of trading using opposite Domini Impact and Domini International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Domini Impact position performs unexpectedly, Domini International 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 Domini International will offset losses from the drop in Domini International's long position.| Domini Impact vs. Goldman Sachs Large | Domini Impact vs. Jhancock Disciplined Value | Domini Impact vs. Aqr Large Cap | Domini Impact vs. Morningstar Unconstrained Allocation |
| Domini International vs. Invesco Global Health | Domini International vs. Blackrock Health Sciences | Domini International vs. Health Care Fund | Domini International vs. Baillie Gifford Health |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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