Correlation Between CPI Card and Dow Jones
Can any of the company-specific risk be diversified away by investing in both CPI Card 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 CPI Card and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CPI Card Group and Dow Jones Industrial, you can compare the effects of market volatilities on CPI Card 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 CPI Card with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPI Card and Dow Jones.
Diversification Opportunities for CPI Card and Dow Jones
Good diversification
The 3 months correlation between CPI and Dow is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding CPI Card Group 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 CPI Card 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 CPI Card Group 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 CPI Card i.e., CPI Card and Dow Jones go up and down completely randomly.
Pair Corralation between CPI Card and Dow Jones
Given the investment horizon of 90 days CPI Card Group is expected to generate 3.71 times more return on investment than Dow Jones. However, CPI Card is 3.71 times more volatile than Dow Jones Industrial. It trades about 0.31 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.15 per unit of risk. If you would invest 2,256 in CPI Card Group on August 24, 2024 and sell it today you would earn a total of 601.00 from holding CPI Card Group or generate 26.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CPI Card Group vs. Dow Jones Industrial
Performance |
| Timeline |
CPI Card and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
CPI Card Group
Pair trading matchups for CPI Card
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with CPI Card and Dow Jones
The main advantage of trading using opposite CPI Card and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CPI Card 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.| CPI Card vs. FirstCash | CPI Card vs. Runway Growth Finance | CPI Card vs. Credit Acceptance | CPI Card vs. SLM Corp |
| Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. Titan Machinery | Dow Jones vs. Simon Property Group |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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