Correlation Between Dow Jones and Flow Traders
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Flow Traders 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 Flow Traders 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 Flow Traders BV, you can compare the effects of market volatilities on Dow Jones and Flow Traders 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 Flow Traders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Flow Traders.
Diversification Opportunities for Dow Jones and Flow Traders
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Flow is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Flow Traders BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flow Traders BV 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 Flow Traders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flow Traders BV has no effect on the direction of Dow Jones i.e., Dow Jones and Flow Traders go up and down completely randomly.
Pair Corralation between Dow Jones and Flow Traders
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.37 times more return on investment than Flow Traders. However, Dow Jones Industrial is 2.67 times less risky than Flow Traders. It trades about 0.05 of its potential returns per unit of risk. Flow Traders BV is currently generating about -0.07 per unit of risk. If you would invest 4,528,247 in Dow Jones Industrial on August 25, 2025 and sell it today you would earn a total of 96,294 from holding Dow Jones Industrial or generate 2.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.48% |
| Values | Daily Returns |
Dow Jones Industrial vs. Flow Traders BV
Performance |
| Timeline |
Dow Jones and Flow Traders Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Flow Traders BV
Pair trading matchups for Flow Traders
Pair Trading with Dow Jones and Flow Traders
The main advantage of trading using opposite Dow Jones and Flow Traders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Flow Traders 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 Flow Traders will offset losses from the drop in Flow Traders' long position.| Dow Jones vs. Alliance Sports Group | Dow Jones vs. InPlay Oil Corp | Dow Jones vs. Rexford Industrial Realty | Dow Jones vs. Interplay Entertainment Corp |
| Flow Traders vs. Value8 NV | Flow Traders vs. Van Lanschot NV | Flow Traders vs. Lavide Holding NV | Flow Traders vs. Eurocastle Investment |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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