Correlation Between 1st Federal and Dow Jones
Can any of the company-specific risk be diversified away by investing in both 1st Federal 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 1st Federal and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 1st Federal Savings and Dow Jones Industrial, you can compare the effects of market volatilities on 1st Federal 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 1st Federal with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1st Federal and Dow Jones.
Diversification Opportunities for 1st Federal and Dow Jones
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between 1st and Dow is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding 1st Federal Savings 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 1st Federal 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 1st Federal Savings 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 1st Federal i.e., 1st Federal and Dow Jones go up and down completely randomly.
Pair Corralation between 1st Federal and Dow Jones
Given the investment horizon of 90 days 1st Federal Savings is expected to under-perform the Dow Jones. In addition to that, 1st Federal is 2.42 times more volatile than Dow Jones Industrial. It trades about -0.07 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.07 per unit of volatility. If you would invest 3,391,085 in Dow Jones Industrial on October 7, 2024 and sell it today you would earn a total of 882,128 from holding Dow Jones Industrial or generate 26.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
1st Federal Savings vs. Dow Jones Industrial
Performance |
| Timeline |
1st Federal and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
1st Federal Savings
Pair trading matchups for 1st Federal
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with 1st Federal and Dow Jones
The main advantage of trading using opposite 1st Federal and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1st Federal 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.| 1st Federal vs. Eldorado Gold Corp | 1st Federal vs. BTU Metals Corp | 1st Federal vs. Aluminum of | 1st Federal vs. Yuexiu Transport Infrastructure |
| Dow Jones vs. NetSol Technologies | Dow Jones vs. Q2 Holdings | Dow Jones vs. Weyco Group | Dow Jones vs. Newell Brands |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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