Correlation Between Fm Opportunistic and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Fm Opportunistic 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 Fm Opportunistic and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fm Opportunistic Income and Dow Jones Industrial, you can compare the effects of market volatilities on Fm Opportunistic 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 Fm Opportunistic with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fm Opportunistic and Dow Jones.
Diversification Opportunities for Fm Opportunistic and Dow Jones
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between XFIX and Dow is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Fm Opportunistic Income 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 Fm Opportunistic 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 Fm Opportunistic Income 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 Fm Opportunistic i.e., Fm Opportunistic and Dow Jones go up and down completely randomly.
Pair Corralation between Fm Opportunistic and Dow Jones
Given the investment horizon of 90 days Fm Opportunistic is expected to generate 5.05 times less return on investment than Dow Jones. But when comparing it to its historical volatility, Fm Opportunistic Income is 3.04 times less risky than Dow Jones. It trades about 0.23 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 4,179,460 in Dow Jones Industrial on September 3, 2024 and sell it today you would earn a total of 311,605 from holding Dow Jones Industrial or generate 7.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fm Opportunistic Income vs. Dow Jones Industrial
Performance |
| Timeline |
Fm Opportunistic and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Fm Opportunistic Income
Pair trading matchups for Fm Opportunistic
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Fm Opportunistic and Dow Jones
The main advantage of trading using opposite Fm Opportunistic and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fm Opportunistic 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.| Fm Opportunistic vs. iShares Core 1 5 | Fm Opportunistic vs. iShares Core International | Fm Opportunistic vs. iShares Treasury Bond | Fm Opportunistic vs. iShares 1 5 Year |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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