Correlation Between Freeman Gold and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Freeman Gold 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 Freeman Gold and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freeman Gold Corp and Dow Jones Industrial, you can compare the effects of market volatilities on Freeman Gold 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 Freeman Gold with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freeman Gold and Dow Jones.
Diversification Opportunities for Freeman Gold and Dow Jones
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Freeman and Dow is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Freeman Gold Corp 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 Freeman Gold 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 Freeman Gold Corp 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 Freeman Gold i.e., Freeman Gold and Dow Jones go up and down completely randomly.
Pair Corralation between Freeman Gold and Dow Jones
Assuming the 90 days horizon Freeman Gold is expected to generate 1.49 times less return on investment than Dow Jones. In addition to that, Freeman Gold is 10.37 times more volatile than Dow Jones Industrial. It trades about 0.01 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.12 per unit of volatility. If you would invest 3,383,361 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 1,107,704 from holding Dow Jones Industrial or generate 32.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Freeman Gold Corp vs. Dow Jones Industrial
Performance |
| Timeline |
Freeman Gold and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Freeman Gold Corp
Pair trading matchups for Freeman Gold
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Freeman Gold and Dow Jones
The main advantage of trading using opposite Freeman Gold and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freeman Gold 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.| Freeman Gold vs. Advance Gold Corp | Freeman Gold vs. Minnova Corp | Freeman Gold vs. Blue Star Gold | Freeman Gold vs. Angkor Resources Corp |
| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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