Correlation Between Power Floating and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Power Floating 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 Power Floating and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Floating Rate and Dow Jones Industrial, you can compare the effects of market volatilities on Power Floating 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 Power Floating with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Floating and Dow Jones.
Diversification Opportunities for Power Floating and Dow Jones
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Power and Dow is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Power Floating Rate 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 Power Floating 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 Power Floating Rate 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 Power Floating i.e., Power Floating and Dow Jones go up and down completely randomly.
Pair Corralation between Power Floating and Dow Jones
Assuming the 90 days horizon Power Floating is expected to generate 13.29 times less return on investment than Dow Jones. But when comparing it to its historical volatility, Power Floating Rate is 12.81 times less risky than Dow Jones. It trades about 0.25 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 4,238,757 in Dow Jones Industrial on August 28, 2024 and sell it today you would earn a total of 234,900 from holding Dow Jones Industrial or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power Floating Rate vs. Dow Jones Industrial
Performance |
| Timeline |
Power Floating and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Power Floating Rate
Pair trading matchups for Power Floating
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Power Floating and Dow Jones
The main advantage of trading using opposite Power Floating and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Floating 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.| Power Floating vs. Power Income Fund | Power Floating vs. Power Momentum Index | Power Floating vs. Power Momentum Index | Power Floating vs. Power Momentum Index |
| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. |