Correlation Between Investec Emerging and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Investec Emerging 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 Investec Emerging and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investec Emerging Markets and Dow Jones Industrial, you can compare the effects of market volatilities on Investec Emerging 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 Investec Emerging with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investec Emerging and Dow Jones.
Diversification Opportunities for Investec Emerging and Dow Jones
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Investec and Dow is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Investec Emerging Markets 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 Investec Emerging 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 Investec Emerging Markets 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 Investec Emerging i.e., Investec Emerging and Dow Jones go up and down completely randomly.
Pair Corralation between Investec Emerging and Dow Jones
Assuming the 90 days horizon Investec Emerging Markets is expected to under-perform the Dow Jones. In addition to that, Investec Emerging is 1.09 times more volatile than Dow Jones Industrial. It trades about -0.13 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.17 per unit of volatility. If you would invest 4,231,300 in Dow Jones Industrial on August 28, 2024 and sell it today you would earn a total of 254,731 from holding Dow Jones Industrial or generate 6.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investec Emerging Markets vs. Dow Jones Industrial
Performance |
| Timeline |
Investec Emerging and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Investec Emerging Markets
Pair trading matchups for Investec Emerging
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Investec Emerging and Dow Jones
The main advantage of trading using opposite Investec Emerging and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investec Emerging 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.| Investec Emerging vs. Versatile Bond Portfolio | Investec Emerging vs. Ishares Municipal Bond | Investec Emerging vs. T Rowe Price | Investec Emerging vs. Dws Government Money |
| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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