Correlation Between Life Insurance and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Life Insurance 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 Life Insurance and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Life Insurance and Dow Jones Industrial, you can compare the effects of market volatilities on Life Insurance 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 Life Insurance with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Insurance and Dow Jones.
Diversification Opportunities for Life Insurance and Dow Jones
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Life and Dow is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Life Insurance 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 Life Insurance 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 Life Insurance 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 Life Insurance i.e., Life Insurance and Dow Jones go up and down completely randomly.
Pair Corralation between Life Insurance and Dow Jones
Assuming the 90 days horizon Life Insurance is expected to under-perform the Dow Jones. In addition to that, Life Insurance is 3.49 times more volatile than Dow Jones Industrial. It trades about -0.08 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.09 per unit of volatility. If you would invest 3,265,670 in Dow Jones Industrial on November 19, 2024 and sell it today you would earn a total of 1,188,938 from holding Dow Jones Industrial or generate 36.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 44.96% |
| Values | Daily Returns |
Life Insurance vs. Dow Jones Industrial
Performance |
| Timeline |
Life Insurance and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Life Insurance
Pair trading matchups for Life Insurance
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Life Insurance and Dow Jones
The main advantage of trading using opposite Life Insurance and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Insurance 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.| Life Insurance vs. Sligro Food Group | Life Insurance vs. Cedar Realty Trust | Life Insurance vs. Village Super Market | Life Insurance vs. MOGU Inc |
| Dow Jones vs. National CineMedia | Dow Jones vs. Emerson Radio | Dow Jones vs. Space Communication | Dow Jones vs. JD Sports Fashion |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |