Correlation Between VictoryShares 500 and Dow Jones
Can any of the company-specific risk be diversified away by investing in both VictoryShares 500 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 VictoryShares 500 and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VictoryShares 500 Enhanced and Dow Jones Industrial, you can compare the effects of market volatilities on VictoryShares 500 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 VictoryShares 500 with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of VictoryShares 500 and Dow Jones.
Diversification Opportunities for VictoryShares 500 and Dow Jones
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between VictoryShares and Dow is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding VictoryShares 500 Enhanced 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 VictoryShares 500 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 VictoryShares 500 Enhanced 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 VictoryShares 500 i.e., VictoryShares 500 and Dow Jones go up and down completely randomly.
Pair Corralation between VictoryShares 500 and Dow Jones
Considering the 90-day investment horizon VictoryShares 500 Enhanced is expected to generate 0.86 times more return on investment than Dow Jones. However, VictoryShares 500 Enhanced is 1.16 times less risky than Dow Jones. It trades about 0.25 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.21 per unit of risk. If you would invest 6,991 in VictoryShares 500 Enhanced on August 25, 2024 and sell it today you would earn a total of 330.00 from holding VictoryShares 500 Enhanced or generate 4.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VictoryShares 500 Enhanced vs. Dow Jones Industrial
Performance |
| Timeline |
VictoryShares 500 and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
VictoryShares 500 Enhanced
Pair trading matchups for VictoryShares 500
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with VictoryShares 500 and Dow Jones
The main advantage of trading using opposite VictoryShares 500 and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VictoryShares 500 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.The idea behind VictoryShares 500 Enhanced and Dow Jones Industrial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |