Correlation Between Pfg American and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Pfg American 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 Pfg American and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfg American Funds and Dow Jones Industrial, you can compare the effects of market volatilities on Pfg American 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 Pfg American with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfg American and Dow Jones.
Diversification Opportunities for Pfg American and Dow Jones
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pfg and Dow is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Pfg American 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 Pfg American 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 Pfg American 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 Pfg American i.e., Pfg American and Dow Jones go up and down completely randomly.
Pair Corralation between Pfg American and Dow Jones
Assuming the 90 days horizon Pfg American is expected to generate 40.91 times less return on investment than Dow Jones. But when comparing it to its historical volatility, Pfg American Funds is 3.48 times less risky than Dow Jones. It trades about 0.02 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 4,093,693 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 378,513 from holding Dow Jones Industrial or generate 9.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pfg American Funds vs. Dow Jones Industrial
Performance |
| Timeline |
Pfg American and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Pfg American Funds
Pair trading matchups for Pfg American
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Pfg American and Dow Jones
The main advantage of trading using opposite Pfg American and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfg American 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.| Pfg American vs. Pimco Diversified Income | Pfg American vs. Evaluator Conservative Rms | Pfg American vs. Western Asset Diversified | Pfg American vs. Blackrock Conservative Prprdptfinstttnl |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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