Correlation Between Dow Jones and Shifa International
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Shifa International 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 Dow Jones and Shifa International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Shifa International Hospitals, you can compare the effects of market volatilities on Dow Jones and Shifa International 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 Dow Jones with a short position of Shifa International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Shifa International.
Diversification Opportunities for Dow Jones and Shifa International
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dow and Shifa is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Shifa International Hospitals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shifa International and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Shifa International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shifa International has no effect on the direction of Dow Jones i.e., Dow Jones and Shifa International go up and down completely randomly.
Pair Corralation between Dow Jones and Shifa International
Assuming the 90 days trading horizon Dow Jones is expected to generate 15.06 times less return on investment than Shifa International. But when comparing it to its historical volatility, Dow Jones Industrial is 5.55 times less risky than Shifa International. It trades about 0.14 of its potential returns per unit of risk. Shifa International Hospitals is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 15,559 in Shifa International Hospitals on September 13, 2024 and sell it today you would earn a total of 24,195 from holding Shifa International Hospitals or generate 155.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Dow Jones Industrial vs. Shifa International Hospitals
Performance |
Timeline |
Dow Jones and Shifa International Volatility Contrast
Predicted Return Density |
Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Shifa International Hospitals
Pair trading matchups for Shifa International
Pair Trading with Dow Jones and Shifa International
The main advantage of trading using opposite Dow Jones and Shifa International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Shifa International 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 Shifa International will offset losses from the drop in Shifa International's long position.Dow Jones vs. ChampionX | Dow Jones vs. Highway Holdings Limited | Dow Jones vs. Westinghouse Air Brake | Dow Jones vs. Cementos Pacasmayo SAA |
Shifa International vs. Oil and Gas | Shifa International vs. Pakistan State Oil | Shifa International vs. Pakistan Petroleum | Shifa International vs. Fauji Fertilizer |
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.
Other Complementary Tools
Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
Fundamental Analysis View fundamental data based on most recent published financial statements | |
Share Portfolio Track or share privately all of your investments from the convenience of any device | |
Risk-Return Analysis View associations between returns expected from investment and the risk you assume |