Correlation Between Iffe Futura and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Iffe Futura 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 Iffe Futura and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iffe Futura SA and Dow Jones Industrial, you can compare the effects of market volatilities on Iffe Futura 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 Iffe Futura with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iffe Futura and Dow Jones.
Diversification Opportunities for Iffe Futura and Dow Jones
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Iffe and Dow is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Iffe Futura SA 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 Iffe Futura 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 Iffe Futura SA 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 Iffe Futura i.e., Iffe Futura and Dow Jones go up and down completely randomly.
Pair Corralation between Iffe Futura and Dow Jones
Assuming the 90 days trading horizon Iffe Futura SA is expected to generate 3.3 times more return on investment than Dow Jones. However, Iffe Futura is 3.3 times more volatile than Dow Jones Industrial. It trades about 0.03 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 58.00 in Iffe Futura SA on September 2, 2024 and sell it today you would earn a total of 12.00 from holding Iffe Futura SA or generate 20.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.02% |
| Values | Daily Returns |
Iffe Futura SA vs. Dow Jones Industrial
Performance |
| Timeline |
Iffe Futura and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Iffe Futura SA
Pair trading matchups for Iffe Futura
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Iffe Futura and Dow Jones
The main advantage of trading using opposite Iffe Futura and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iffe Futura 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.| Iffe Futura vs. Metrovacesa SA | Iffe Futura vs. Elecnor SA | Iffe Futura vs. Mapfre | Iffe Futura vs. Amper SA |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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