Correlation Between Mini Dow and Lumber Futures
Can any of the company-specific risk be diversified away by investing in both Mini Dow and Lumber Futures 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 Mini Dow and Lumber Futures into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mini Dow Jones and Lumber Futures, you can compare the effects of market volatilities on Mini Dow and Lumber Futures 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 Mini Dow with a short position of Lumber Futures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mini Dow and Lumber Futures.
Diversification Opportunities for Mini Dow and Lumber Futures
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Mini and Lumber is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Mini Dow Jones and Lumber Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumber Futures and Mini Dow 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 Mini Dow Jones are associated (or correlated) with Lumber Futures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lumber Futures has no effect on the direction of Mini Dow i.e., Mini Dow and Lumber Futures go up and down completely randomly.
Pair Corralation between Mini Dow and Lumber Futures
If you would invest 51,500 in Lumber Futures on August 29, 2024 and sell it today you would earn a total of 7,700 from holding Lumber Futures or generate 14.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Mini Dow Jones vs. Lumber Futures
Performance |
| Timeline |
| Mini Dow Jones |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Lumber Futures |
Mini Dow and Lumber Futures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mini Dow and Lumber Futures
The main advantage of trading using opposite Mini Dow and Lumber Futures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mini Dow position performs unexpectedly, Lumber Futures 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 Lumber Futures will offset losses from the drop in Lumber Futures' long position.| Mini Dow vs. Live Cattle Futures | Mini Dow vs. US Dollar | Mini Dow vs. Micro E mini Russell | Mini Dow vs. Lumber Futures |
| Lumber Futures vs. Palladium | Lumber Futures vs. Heating Oil | Lumber Futures vs. Micro Gold Futures | Lumber Futures vs. Lean Hogs Futures |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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