Correlation Between International Research and Dow Jones
Can any of the company-specific risk be diversified away by investing in both International Research 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 Research 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 Research and Dow Jones Industrial, you can compare the effects of market volatilities on International Research 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 Research with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Research and Dow Jones.
Diversification Opportunities for International Research and Dow Jones
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between International and Dow is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding International Research 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 Research 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 Research 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 Research i.e., International Research and Dow Jones go up and down completely randomly.
Pair Corralation between International Research and Dow Jones
Assuming the 90 days trading horizon International Research is expected to generate 63.24 times more return on investment than Dow Jones. However, International Research is 63.24 times more volatile than Dow Jones Industrial. It trades about 0.04 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of risk. If you would invest 98.00 in International Research on August 29, 2024 and sell it today you would lose (47.00) from holding International Research or give up 47.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.18% |
| Values | Daily Returns |
International Research vs. Dow Jones Industrial
Performance |
| Timeline |
International Research and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
International Research
Pair trading matchups for International Research
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with International Research and Dow Jones
The main advantage of trading using opposite International Research and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Research 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 Research vs. Internet Thailand Public | International Research vs. Jasmine International Public | International Research vs. Hydrotek Public | International Research vs. Home Pottery Public |
| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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