Correlation Between Dow Jones and MFC Strategic

Can any of the company-specific risk be diversified away by investing in both Dow Jones and MFC Strategic 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 MFC Strategic 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 MFC Strategic Storage, you can compare the effects of market volatilities on Dow Jones and MFC Strategic 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 MFC Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and MFC Strategic.

Diversification Opportunities for Dow Jones and MFC Strategic

-0.42

Correlation Coefficient

Dow Jones  MFC Strategic

Very good diversification

The 3 months correlation between Dow and MFC is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and MFC Strategic Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFC Strategic Storage 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 MFC Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFC Strategic Storage has no effect on the direction of Dow Jones i.e., Dow Jones and MFC Strategic go up and down completely randomly.

Pair Corralation between Dow Jones and MFC Strategic

Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.95 times more return on investment than MFC Strategic. However, Dow Jones Industrial is 1.05 times less risky than MFC Strategic. It trades about 0.25 of its potential returns per unit of risk. MFC Strategic Storage is currently generating about 0.0 per unit of risk. If you would invest  4,011,350  in Dow Jones Industrial on April 25, 2025 and sell it today you would earn a total of  489,679  from holding Dow Jones Industrial or generate 12.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	91.8%
Values	Daily Returns

Dow Jones Industrial  vs.  MFC Strategic Storage

Pair Trading with Dow Jones and MFC Strategic

The main advantage of trading using opposite Dow Jones and MFC Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, MFC Strategic 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 MFC Strategic will offset losses from the drop in MFC Strategic's long position.

The idea behind Dow Jones Industrial and MFC Strategic Storage pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.