Correlation Between Irish Continental and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Irish Continental 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 Irish Continental and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Irish Continental Group and Dow Jones Industrial, you can compare the effects of market volatilities on Irish Continental 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 Irish Continental with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Irish Continental and Dow Jones.
Diversification Opportunities for Irish Continental and Dow Jones
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Irish and Dow is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Irish Continental Group 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 Irish Continental 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 Irish Continental Group 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 Irish Continental i.e., Irish Continental and Dow Jones go up and down completely randomly.
Pair Corralation between Irish Continental and Dow Jones
Assuming the 90 days trading horizon Irish Continental Group is expected to generate 1.65 times more return on investment than Dow Jones. However, Irish Continental is 1.65 times more volatile than Dow Jones Industrial. It trades about 0.02 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.21 per unit of risk. If you would invest 508.00 in Irish Continental Group on November 28, 2024 and sell it today you would earn a total of 2.00 from holding Irish Continental Group or generate 0.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Irish Continental Group vs. Dow Jones Industrial
Performance |
| Timeline |
Irish Continental and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Irish Continental Group
Pair trading matchups for Irish Continental
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Irish Continental and Dow Jones
The main advantage of trading using opposite Irish Continental and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Irish Continental 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.| Irish Continental vs. Dalata Hotel Group | Irish Continental vs. Kingspan Group plc | Irish Continental vs. Glanbia PLC |
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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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