Correlation Between Food Culture and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Food Culture 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 Food Culture and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Food Culture and Dow Jones Industrial, you can compare the effects of market volatilities on Food Culture 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 Food Culture with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Food Culture and Dow Jones.
Diversification Opportunities for Food Culture and Dow Jones
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Food and Dow is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Food Culture 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 Food Culture 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 Food Culture 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 Food Culture i.e., Food Culture and Dow Jones go up and down completely randomly.
Pair Corralation between Food Culture and Dow Jones
Given the investment horizon of 90 days Food Culture is expected to generate 86.12 times more return on investment than Dow Jones. However, Food Culture is 86.12 times more volatile than Dow Jones Industrial. It trades about 0.08 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.11 per unit of risk. If you would invest 405.00 in Food Culture on September 12, 2024 and sell it today you would lose (380.00) from holding Food Culture or give up 93.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Food Culture vs. Dow Jones Industrial
Performance |
| Timeline |
Food Culture and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Food Culture
Pair trading matchups for Food Culture
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Food Culture and Dow Jones
The main advantage of trading using opposite Food Culture and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Food Culture 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.| Food Culture vs. Supercom | Food Culture vs. Discover Financial Services | Food Culture vs. SFL Corporation | Food Culture vs. Chiba Bank Ltd |
| Dow Jones vs. Aeye Inc | Dow Jones vs. Gentex | Dow Jones vs. Marine Products | Dow Jones vs. CarsalesCom Ltd ADR |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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