Correlation Between Forward Air and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Forward Air 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 Forward Air and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Forward Air and Dow Jones Industrial, you can compare the effects of market volatilities on Forward Air 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 Forward Air with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forward Air and Dow Jones.
Diversification Opportunities for Forward Air and Dow Jones
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Forward and Dow is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Forward Air 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 Forward Air 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 Forward Air 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 Forward Air i.e., Forward Air and Dow Jones go up and down completely randomly.
Pair Corralation between Forward Air and Dow Jones
Given the investment horizon of 90 days Forward Air is expected to under-perform the Dow Jones. In addition to that, Forward Air is 6.47 times more volatile than Dow Jones Industrial. It trades about -0.03 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.13 per unit of volatility. If you would invest 3,541,698 in Dow Jones Industrial on August 24, 2024 and sell it today you would earn a total of 845,337 from holding Dow Jones Industrial or generate 23.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Forward Air vs. Dow Jones Industrial
Performance |
| Timeline |
Forward Air and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Forward Air
Pair trading matchups for Forward Air
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Forward Air and Dow Jones
The main advantage of trading using opposite Forward Air and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forward Air 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.| Forward Air vs. Landstar System | Forward Air vs. JB Hunt Transport | Forward Air vs. Expeditors International of | Forward Air vs. CH Robinson Worldwide |
| Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. Titan Machinery | Dow Jones vs. Simon Property Group |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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