Correlation Between Catalystmap Global and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Catalystmap Global 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 Catalystmap Global and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catalystmap Global Equity and Dow Jones Industrial, you can compare the effects of market volatilities on Catalystmap Global 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 Catalystmap Global with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalystmap Global and Dow Jones.
Diversification Opportunities for Catalystmap Global and Dow Jones
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Catalystmap and Dow is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Catalystmap Global Equity 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 Catalystmap Global 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 Catalystmap Global Equity 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 Catalystmap Global i.e., Catalystmap Global and Dow Jones go up and down completely randomly.
Pair Corralation between Catalystmap Global and Dow Jones
Assuming the 90 days horizon Catalystmap Global is expected to generate 1.82 times less return on investment than Dow Jones. But when comparing it to its historical volatility, Catalystmap Global Equity is 1.18 times less risky than Dow Jones. It trades about 0.07 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,446,369 in Dow Jones Industrial on September 12, 2024 and sell it today you would earn a total of 978,414 from holding Dow Jones Industrial or generate 28.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Catalystmap Global Equity vs. Dow Jones Industrial
Performance |
| Timeline |
Catalystmap Global and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Catalystmap Global Equity
Pair trading matchups for Catalystmap Global
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Catalystmap Global and Dow Jones
The main advantage of trading using opposite Catalystmap Global and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalystmap Global 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.| Catalystmap Global vs. The National Tax Free | Catalystmap Global vs. Nuveen Minnesota Municipal | Catalystmap Global vs. Counterpoint Tactical Municipal | Catalystmap Global vs. Dws Government Money |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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