Correlation Between International Paper and Dow Jones
Can any of the company-specific risk be diversified away by investing in both International Paper 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 International Paper and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Paper and Dow Jones Industrial, you can compare the effects of market volatilities on International Paper 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 International Paper with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Paper and Dow Jones.
Diversification Opportunities for International Paper and Dow Jones
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between International and Dow is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding International Paper 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 International Paper 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 International Paper 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 International Paper i.e., International Paper and Dow Jones go up and down completely randomly.
Pair Corralation between International Paper and Dow Jones
If you would invest 4,179,460 in Dow Jones Industrial on September 5, 2024 and sell it today you would earn a total of 321,944 from holding Dow Jones Industrial or generate 7.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 40.91% |
| Values | Daily Returns |
International Paper vs. Dow Jones Industrial
Performance |
| Timeline |
International Paper and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
International Paper
Pair trading matchups for International Paper
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with International Paper and Dow Jones
The main advantage of trading using opposite International Paper and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Paper 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.| International Paper vs. SunLink Health Systems | International Paper vs. Neogen | International Paper vs. Xponential Fitness | International Paper vs. Waters |
| Dow Jones vs. Shake Shack | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. Dave Busters Entertainment | Dow Jones vs. Meli Hotels International |
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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