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Correlation Between DOW and Facebook

Analyzing existing cross correlation between DOW and Facebook. You can compare the effects of market volatilities on DOW and Facebook 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 with a short position of Facebook. Check out your portfolio center. Please also check ongoing floating volatility patterns of DOW and Facebook.

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Diversification Opportunities for DOW and Facebook

DOW diversification synergy
0.79
DOW
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Poor diversification

The 3 months correlation between DOW and Facebook is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding DOW and Facebook Inc in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Facebook and DOW 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 are associated (or correlated) with Facebook. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Facebook has no effect on the direction of DOW i.e. DOW and Facebook go up and down completely randomly.
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Pair Corralation between DOW and Facebook

Given the investment horizon of 30 days, DOW is expected to generate 1.65 times less return on investment than Facebook. But when comparing it to its historical volatility, DOW is 1.88 times less risky than Facebook. It trades about 0.07 of its potential returns per unit of risk. Facebook is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  19,979  in Facebook on January 24, 2020 and sell it today you would earn a total of  1,039  from holding Facebook or generate 5.2% return on investment over 30 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy98.41%
ValuesDaily Returns

DOW  vs.  Facebook Inc

 Performance (%) 
    
  Timeline 
 Predicted Return Density 
    
  Returns 
Check out your portfolio center. Please also try Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.