Correlation Between FARM 51 and Dow Jones
Can any of the company-specific risk be diversified away by investing in both FARM 51 and Dow Jones 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 FARM 51 and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FARM 51 GROUP and Dow Jones Industrial, you can compare the effects of market volatilities on FARM 51 and Dow Jones 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 FARM 51 with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of FARM 51 and Dow Jones.
Diversification Opportunities for FARM 51 and Dow Jones
Very good diversification
The 3 months correlation between FARM and Dow is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding FARM 51 GROUP and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and FARM 51 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 FARM 51 GROUP are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of FARM 51 i.e., FARM 51 and Dow Jones go up and down completely randomly.
Pair Corralation between FARM 51 and Dow Jones
Assuming the 90 days horizon FARM 51 GROUP is expected to generate 2.09 times more return on investment than Dow Jones. However, FARM 51 is 2.09 times more volatile than Dow Jones Industrial. It trades about 0.01 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.05 per unit of risk. If you would invest 301.00 in FARM 51 GROUP on October 17, 2024 and sell it today you would earn a total of 0.00 from holding FARM 51 GROUP or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 85.71% |
| Values | Daily Returns |
FARM 51 GROUP vs. Dow Jones Industrial
Performance |
| Timeline |
FARM 51 and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
FARM 51 GROUP
Pair trading matchups for FARM 51
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with FARM 51 and Dow Jones
The main advantage of trading using opposite FARM 51 and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FARM 51 position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| FARM 51 vs. Renesas Electronics | FARM 51 vs. AEGEAN AIRLINES | FARM 51 vs. SOUTHWEST AIRLINES | FARM 51 vs. ARROW ELECTRONICS |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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