Correlation Between Short Duration and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Short Duration 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 Short Duration and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Short Duration Inflation and Dow Jones Industrial, you can compare the effects of market volatilities on Short Duration 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 Short Duration with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short Duration and Dow Jones.
Diversification Opportunities for Short Duration and Dow Jones
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Short and Dow is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Short Duration Inflation 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 Short Duration 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 Short Duration Inflation 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 Short Duration i.e., Short Duration and Dow Jones go up and down completely randomly.
Pair Corralation between Short Duration and Dow Jones
Assuming the 90 days horizon Short Duration Inflation is expected to generate 0.53 times more return on investment than Dow Jones. However, Short Duration Inflation is 1.89 times less risky than Dow Jones. It trades about -0.18 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.14 per unit of risk. If you would invest 982.00 in Short Duration Inflation on September 19, 2024 and sell it today you would lose (16.00) from holding Short Duration Inflation or give up 1.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Short Duration Inflation vs. Dow Jones Industrial
Performance |
| Timeline |
Short Duration and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Short Duration Inflation
Pair trading matchups for Short Duration
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Short Duration and Dow Jones
The main advantage of trading using opposite Short Duration and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Short Duration 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.| Short Duration vs. Mid Cap Value | Short Duration vs. Equity Growth Fund | Short Duration vs. Income Growth Fund | Short Duration vs. Diversified Bond Fund |
| Dow Jones vs. Mangazeya Mining | Dow Jones vs. Summit Materials | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. AMCON Distributing |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |