Correlation Between Farmland Partners and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Farmland Partners 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 Farmland Partners and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Farmland Partners and Dow Jones Industrial, you can compare the effects of market volatilities on Farmland Partners 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 Farmland Partners with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmland Partners and Dow Jones.
Diversification Opportunities for Farmland Partners and Dow Jones
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Farmland and Dow is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Farmland Partners 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 Farmland Partners 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 Farmland Partners 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 Farmland Partners i.e., Farmland Partners and Dow Jones go up and down completely randomly.
Pair Corralation between Farmland Partners and Dow Jones
Considering the 90-day investment horizon Farmland Partners is expected to generate 2.92 times less return on investment than Dow Jones. In addition to that, Farmland Partners is 2.4 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 0.08 per unit of volatility. If you would invest 3,359,792 in Dow Jones Industrial on August 28, 2024 and sell it today you would earn a total of 1,113,865 from holding Dow Jones Industrial or generate 33.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Farmland Partners vs. Dow Jones Industrial
Performance |
| Timeline |
Farmland Partners and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Farmland Partners
Pair trading matchups for Farmland Partners
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Farmland Partners and Dow Jones
The main advantage of trading using opposite Farmland Partners and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmland Partners 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.| Farmland Partners vs. Broadstone Net Lease | Farmland Partners vs. Armada Hflr Pr | Farmland Partners vs. Brightspire Capital | Farmland Partners vs. Safehold |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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