Correlation Between Merchants Bancorp and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Merchants Bancorp 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 Merchants Bancorp and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merchants Bancorp PR and Dow Jones Industrial, you can compare the effects of market volatilities on Merchants Bancorp 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 Merchants Bancorp with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merchants Bancorp and Dow Jones.
Diversification Opportunities for Merchants Bancorp and Dow Jones
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Merchants and Dow is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Merchants Bancorp PR 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 Merchants Bancorp 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 Merchants Bancorp PR 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 Merchants Bancorp i.e., Merchants Bancorp and Dow Jones go up and down completely randomly.
Pair Corralation between Merchants Bancorp and Dow Jones
If you would invest 4,176,346 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 314,719 from holding Dow Jones Industrial or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Merchants Bancorp PR vs. Dow Jones Industrial
Performance |
| Timeline |
Merchants Bancorp and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Merchants Bancorp PR
Pair trading matchups for Merchants Bancorp
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Merchants Bancorp and Dow Jones
The main advantage of trading using opposite Merchants Bancorp and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merchants Bancorp 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.| Merchants Bancorp vs. Merchants Bancorp | Merchants Bancorp vs. Valley National Bancorp | Merchants Bancorp vs. Valley National Bancorp | Merchants Bancorp vs. Wintrust Financial Corp |
| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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