Correlation Between Loft II and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Loft II 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 Loft II and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Loft II Fundo and Dow Jones Industrial, you can compare the effects of market volatilities on Loft II 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 Loft II with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loft II and Dow Jones.
Diversification Opportunities for Loft II and Dow Jones
Very good diversification
The 3 months correlation between Loft and Dow is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Loft II Fundo 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 Loft II 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 Loft II Fundo 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 Loft II i.e., Loft II and Dow Jones go up and down completely randomly.
Pair Corralation between Loft II and Dow Jones
Assuming the 90 days trading horizon Loft II Fundo is expected to generate 7.64 times more return on investment than Dow Jones. However, Loft II is 7.64 times more volatile than Dow Jones Industrial. It trades about -0.01 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.09 per unit of risk. If you would invest 840.00 in Loft II Fundo on December 4, 2024 and sell it today you would lose (105.00) from holding Loft II Fundo or give up 12.5% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Loft II Fundo vs. Dow Jones Industrial
Performance |
Timeline |
Loft II and Dow Jones Volatility Contrast
Predicted Return Density |
Returns |
Loft II Fundo
Pair trading matchups for Loft II
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Loft II and Dow Jones
The main advantage of trading using opposite Loft II and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loft II 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.Loft II vs. Domo Fundo de | Loft II vs. Aesapar Fundo de | Loft II vs. Ourinvest Jpp Fundo | Loft II vs. Kinea Hedge Fund |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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