Correlation Between More Provident and Dow Jones
Can any of the company-specific risk be diversified away by investing in both More Provident 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 More Provident and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between More Provident Funds and Dow Jones Industrial, you can compare the effects of market volatilities on More Provident 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 More Provident with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of More Provident and Dow Jones.
Diversification Opportunities for More Provident and Dow Jones
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between More and Dow is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding More Provident Funds 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 More Provident 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 More Provident Funds 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 More Provident i.e., More Provident and Dow Jones go up and down completely randomly.
Pair Corralation between More Provident and Dow Jones
Assuming the 90 days trading horizon More Provident Funds is expected to generate 2.66 times more return on investment than Dow Jones. However, More Provident is 2.66 times more volatile than Dow Jones Industrial. It trades about 0.18 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of risk. If you would invest 47,085 in More Provident Funds on September 20, 2024 and sell it today you would earn a total of 25,915 from holding More Provident Funds or generate 55.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 74.85% |
| Values | Daily Returns |
More Provident Funds vs. Dow Jones Industrial
Performance |
| Timeline |
More Provident and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
More Provident Funds
Pair trading matchups for More Provident
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with More Provident and Dow Jones
The main advantage of trading using opposite More Provident and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if More Provident 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.| More Provident vs. Clal Insurance Enterprises | More Provident vs. Unicorn Technologies | More Provident vs. IDI Insurance | More Provident vs. Tower Semiconductor |
| Dow Jones vs. Digi International | Dow Jones vs. Grupo Televisa SAB | Dow Jones vs. United Microelectronics | Dow Jones vs. Weibo Corp |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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