Correlation Between Macfarlane Group and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Macfarlane Group 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 Macfarlane Group and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macfarlane Group PLC and Dow Jones Industrial, you can compare the effects of market volatilities on Macfarlane Group 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 Macfarlane Group with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macfarlane Group and Dow Jones.
Diversification Opportunities for Macfarlane Group and Dow Jones
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Macfarlane and Dow is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Macfarlane Group PLC 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 Macfarlane Group 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 Macfarlane Group PLC 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 Macfarlane Group i.e., Macfarlane Group and Dow Jones go up and down completely randomly.
Pair Corralation between Macfarlane Group and Dow Jones
Assuming the 90 days trading horizon Macfarlane Group PLC is expected to under-perform the Dow Jones. In addition to that, Macfarlane Group is 1.43 times more volatile than Dow Jones Industrial. It trades about -0.24 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.27 per unit of volatility. If you would invest 4,223,305 in Dow Jones Industrial on August 30, 2024 and sell it today you would earn a total of 248,901 from holding Dow Jones Industrial or generate 5.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macfarlane Group PLC vs. Dow Jones Industrial
Performance |
| Timeline |
Macfarlane Group and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Macfarlane Group PLC
Pair trading matchups for Macfarlane Group
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Macfarlane Group and Dow Jones
The main advantage of trading using opposite Macfarlane Group and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macfarlane Group 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.| Macfarlane Group vs. Berkshire Hathaway | Macfarlane Group vs. Chocoladefabriken Lindt Spruengli | Macfarlane Group vs. Rockwood Realisation PLC | Macfarlane Group vs. Toyota Motor Corp |
| Dow Jones vs. Skillful Craftsman Education | Dow Jones vs. Acco Brands | Dow Jones vs. Cracker Barrel Old | Dow Jones vs. Coursera |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |