Correlation Between Falcon Oil and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Falcon Oil 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 Falcon Oil and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Falcon Oil Gas and Dow Jones Industrial, you can compare the effects of market volatilities on Falcon Oil 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 Falcon Oil with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Oil and Dow Jones.
Diversification Opportunities for Falcon Oil and Dow Jones
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Falcon and Dow is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Oil Gas 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 Falcon Oil 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 Falcon Oil Gas 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 Falcon Oil i.e., Falcon Oil and Dow Jones go up and down completely randomly.
Pair Corralation between Falcon Oil and Dow Jones
Assuming the 90 days trading horizon Falcon Oil Gas is expected to under-perform the Dow Jones. In addition to that, Falcon Oil is 4.84 times more volatile than Dow Jones Industrial. It trades about -0.05 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 3,387,678 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 1,103,387 from holding Dow Jones Industrial or generate 32.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 98.67% |
| Values | Daily Returns |
Falcon Oil Gas vs. Dow Jones Industrial
Performance |
| Timeline |
Falcon Oil and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Falcon Oil Gas
Pair trading matchups for Falcon Oil
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Falcon Oil and Dow Jones
The main advantage of trading using opposite Falcon Oil and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Oil 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.| Falcon Oil vs. Trainline Plc | Falcon Oil vs. European Metals Holdings | Falcon Oil vs. Europa Metals | Falcon Oil vs. Abingdon Health Plc |
| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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