Correlation Between RETAIL FOOD and Dow Jones
Can any of the company-specific risk be diversified away by investing in both RETAIL FOOD 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 RETAIL FOOD and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RETAIL FOOD GROUP and Dow Jones Industrial, you can compare the effects of market volatilities on RETAIL FOOD 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 RETAIL FOOD with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of RETAIL FOOD and Dow Jones.
Diversification Opportunities for RETAIL FOOD and Dow Jones
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between RETAIL and Dow is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding RETAIL FOOD 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 RETAIL FOOD 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 RETAIL FOOD 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 RETAIL FOOD i.e., RETAIL FOOD and Dow Jones go up and down completely randomly.
Pair Corralation between RETAIL FOOD and Dow Jones
Assuming the 90 days trading horizon RETAIL FOOD GROUP is expected to generate 2.6 times more return on investment than Dow Jones. However, RETAIL FOOD is 2.6 times more volatile than Dow Jones Industrial. It trades about 0.25 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.26 per unit of risk. If you would invest 3.70 in RETAIL FOOD GROUP on August 28, 2024 and sell it today you would earn a total of 0.50 from holding RETAIL FOOD GROUP or generate 13.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RETAIL FOOD GROUP vs. Dow Jones Industrial
Performance |
| Timeline |
RETAIL FOOD and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
RETAIL FOOD GROUP
Pair trading matchups for RETAIL FOOD
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with RETAIL FOOD and Dow Jones
The main advantage of trading using opposite RETAIL FOOD and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RETAIL FOOD 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.| RETAIL FOOD vs. Apple Inc | RETAIL FOOD vs. Apple Inc | RETAIL FOOD vs. Apple Inc | RETAIL FOOD vs. Apple Inc |
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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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