Correlation Between Federated Institutional and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Federated Institutional 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 Federated Institutional and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Institutional High and Dow Jones Industrial, you can compare the effects of market volatilities on Federated Institutional 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 Federated Institutional with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Institutional and Dow Jones.
Diversification Opportunities for Federated Institutional and Dow Jones
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and Dow is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Federated Institutional High 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 Federated Institutional 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 Federated Institutional High 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 Federated Institutional i.e., Federated Institutional and Dow Jones go up and down completely randomly.
Pair Corralation between Federated Institutional and Dow Jones
Assuming the 90 days horizon Federated Institutional is expected to generate 8.09 times less return on investment than Dow Jones. But when comparing it to its historical volatility, Federated Institutional High is 5.63 times less risky than Dow Jones. It trades about 0.17 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 4,238,757 in Dow Jones Industrial on August 29, 2024 and sell it today you would earn a total of 233,449 from holding Dow Jones Industrial or generate 5.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Institutional High vs. Dow Jones Industrial
Performance |
| Timeline |
Federated Institutional and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Federated Institutional High
Pair trading matchups for Federated Institutional
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Federated Institutional and Dow Jones
The main advantage of trading using opposite Federated Institutional and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Institutional 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.| Federated Institutional vs. Goldman Sachs Emerging | Federated Institutional vs. Jpmorgan High Yield | Federated Institutional vs. Jpmorgan Short Duration | Federated Institutional vs. Jpmorgan Mid Cap |
| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |