Correlation Between Causeway Emerging and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Causeway Emerging 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 Causeway Emerging and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Causeway Emerging Markets and Dow Jones Industrial, you can compare the effects of market volatilities on Causeway Emerging 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 Causeway Emerging with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Causeway Emerging and Dow Jones.
Diversification Opportunities for Causeway Emerging and Dow Jones
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Causeway and Dow is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Causeway Emerging Markets 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 Causeway Emerging 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 Causeway Emerging Markets 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 Causeway Emerging i.e., Causeway Emerging and Dow Jones go up and down completely randomly.
Pair Corralation between Causeway Emerging and Dow Jones
Assuming the 90 days horizon Causeway Emerging Markets is expected to generate 1.27 times more return on investment than Dow Jones. However, Causeway Emerging is 1.27 times more volatile than Dow Jones Industrial. It trades about 0.06 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of risk. If you would invest 874.00 in Causeway Emerging Markets on August 26, 2024 and sell it today you would earn a total of 275.00 from holding Causeway Emerging Markets or generate 31.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Causeway Emerging Markets vs. Dow Jones Industrial
Performance |
| Timeline |
Causeway Emerging and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Causeway Emerging Markets
Pair trading matchups for Causeway Emerging
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Causeway Emerging and Dow Jones
The main advantage of trading using opposite Causeway Emerging and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Causeway Emerging 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.| Causeway Emerging vs. Causeway International Small | Causeway Emerging vs. Causeway Emerging Markets | Causeway Emerging vs. Causeway Global Value | Causeway Emerging vs. Causeway Global Value |
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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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