Correlation Between FORTUNE and Dow Jones

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both FORTUNE 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 FORTUNE and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FORTUNE BRANDS INC and Dow Jones Industrial, you can compare the effects of market volatilities on FORTUNE 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 FORTUNE with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of FORTUNE and Dow Jones.

Diversification Opportunities for FORTUNE and Dow Jones

0.33
  Correlation Coefficient

Weak diversification

The 3 months correlation between FORTUNE and Dow is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding FORTUNE BRANDS INC 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 FORTUNE 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 FORTUNE BRANDS INC 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 FORTUNE i.e., FORTUNE and Dow Jones go up and down completely randomly.
    Optimize

Pair Corralation between FORTUNE and Dow Jones

Assuming the 90 days trading horizon FORTUNE BRANDS INC is expected to under-perform the Dow Jones. But the bond apears to be less risky and, when comparing its historical volatility, FORTUNE BRANDS INC is 1.4 times less risky than Dow Jones. The bond trades about -0.24 of its potential returns per unit of risk. The Dow Jones Industrial is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  4,124,052  in Dow Jones Industrial on August 26, 2024 and sell it today you would earn a total of  305,599  from holding Dow Jones Industrial or generate 7.41% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy29.23%
ValuesDaily Returns

FORTUNE BRANDS INC  vs.  Dow Jones Industrial

 Performance 
       Timeline  

FORTUNE and Dow Jones Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with FORTUNE and Dow Jones

The main advantage of trading using opposite FORTUNE and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FORTUNE 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.
FORTUNE vs. Apogee Therapeutics, Common
FORTUNE vs. Ihuman Inc
FORTUNE vs. Mind Medicine
FORTUNE vs. Valneva SE ADR
The idea behind FORTUNE BRANDS INC and Dow Jones Industrial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
Dow Jones vs. MI Homes
Dow Jones vs. Franklin Street Properties
Dow Jones vs. Summit Hotel Properties
Dow Jones vs. Portillos
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

Other Complementary Tools

Options Analysis
Analyze and evaluate options and option chains as a potential hedge for your portfolios
Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk
Equity Forecasting
Use basic forecasting models to generate price predictions and determine price momentum
Competition Analyzer
Analyze and compare many basic indicators for a group of related or unrelated entities
Insider Screener
Find insiders across different sectors to evaluate their impact on performance


 
Macroaxis helps investors of all levels and skills to maximize the upside of all their holdings and minimize the risk associated with market volatility, economic swings, and company-specific events. View terms and conditions
 
Feedback Blog
Made with optimal in San Francisco
2024 Macroaxis LLC
COMMON DESTINATIONS
MAIN CATEGORIES
COMPANY