Correlation Between Simmons First and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Simmons First 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 Simmons First and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simmons First National and Dow Jones Industrial, you can compare the effects of market volatilities on Simmons First 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 Simmons First with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simmons First and Dow Jones.
Diversification Opportunities for Simmons First and Dow Jones
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Simmons and Dow is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Simmons First National 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 Simmons First 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 Simmons First National 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 Simmons First i.e., Simmons First and Dow Jones go up and down completely randomly.
Pair Corralation between Simmons First and Dow Jones
Given the investment horizon of 90 days Simmons First National is expected to generate 2.43 times more return on investment than Dow Jones. However, Simmons First is 2.43 times more volatile than Dow Jones Industrial. It trades about 0.2 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.16 per unit of risk. If you would invest 2,116 in Simmons First National on August 28, 2024 and sell it today you would earn a total of 370.00 from holding Simmons First National or generate 17.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simmons First National vs. Dow Jones Industrial
Performance |
| Timeline |
Simmons First and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Simmons First National
Pair trading matchups for Simmons First
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Simmons First and Dow Jones
The main advantage of trading using opposite Simmons First and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simmons First 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.| Simmons First vs. Renasant | Simmons First vs. Sandy Spring Bancorp | Simmons First vs. Home BancShares | Simmons First vs. Southside Bancshares, |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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