Correlation Between IA Clarington and Dow Jones
Can any of the company-specific risk be diversified away by investing in both IA Clarington 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 IA Clarington and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IA Clarington Strategic and Dow Jones Industrial, you can compare the effects of market volatilities on IA Clarington 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 IA Clarington with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of IA Clarington and Dow Jones.
Diversification Opportunities for IA Clarington and Dow Jones
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ISCB and Dow is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding IA Clarington Strategic 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 IA Clarington 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 IA Clarington Strategic 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 IA Clarington i.e., IA Clarington and Dow Jones go up and down completely randomly.
Pair Corralation between IA Clarington and Dow Jones
Assuming the 90 days trading horizon IA Clarington is expected to generate 6.07 times less return on investment than Dow Jones. But when comparing it to its historical volatility, IA Clarington Strategic is 5.57 times less risky than Dow Jones. It trades about 0.18 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 4,093,693 in Dow Jones Industrial on September 2, 2024 and sell it today you would earn a total of 397,372 from holding Dow Jones Industrial or generate 9.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.63% |
| Values | Daily Returns |
IA Clarington Strategic vs. Dow Jones Industrial
Performance |
| Timeline |
IA Clarington and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
IA Clarington Strategic
Pair trading matchups for IA Clarington
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with IA Clarington and Dow Jones
The main advantage of trading using opposite IA Clarington and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IA Clarington 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.| IA Clarington vs. Fidelity Tactical High | IA Clarington vs. Global Healthcare Income | IA Clarington vs. CI Global Alpha | IA Clarington vs. CI Global Alpha |
| Dow Jones vs. Dream Finders Homes | Dow Jones vs. GEN Restaurant Group, | Dow Jones vs. National Beverage Corp | Dow Jones vs. BJs Restaurants |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |