Correlation Between MicroSectors Solactive and Dow Jones
Can any of the company-specific risk be diversified away by investing in both MicroSectors Solactive 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 MicroSectors Solactive and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MicroSectors Solactive FANG and Dow Jones Industrial, you can compare the effects of market volatilities on MicroSectors Solactive 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 MicroSectors Solactive with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors Solactive and Dow Jones.
Diversification Opportunities for MicroSectors Solactive and Dow Jones
-0.92 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between MicroSectors and Dow is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors Solactive FANG 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 MicroSectors Solactive 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 MicroSectors Solactive FANG 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 MicroSectors Solactive i.e., MicroSectors Solactive and Dow Jones go up and down completely randomly.
Pair Corralation between MicroSectors Solactive and Dow Jones
Given the investment horizon of 90 days MicroSectors Solactive FANG is expected to under-perform the Dow Jones. In addition to that, MicroSectors Solactive is 4.81 times more volatile than Dow Jones Industrial. It trades about -0.03 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.27 per unit of volatility. If you would invest 4,223,305 in Dow Jones Industrial on August 30, 2024 and sell it today you would earn a total of 248,901 from holding Dow Jones Industrial or generate 5.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MicroSectors Solactive FANG vs. Dow Jones Industrial
Performance |
| Timeline |
MicroSectors Solactive and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
MicroSectors Solactive FANG
Pair trading matchups for MicroSectors Solactive
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with MicroSectors Solactive and Dow Jones
The main advantage of trading using opposite MicroSectors Solactive and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors Solactive 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.| MicroSectors Solactive vs. Direxion Daily Dow | MicroSectors Solactive vs. MicroSectors Solactive FANG | MicroSectors Solactive vs. MicroSectors FANG Index |
| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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