Correlation Between Causeway International and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Causeway International 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 International 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 International Small and Dow Jones Industrial, you can compare the effects of market volatilities on Causeway International 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 International with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Causeway International and Dow Jones.
Diversification Opportunities for Causeway International and Dow Jones
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CAUSEWAY and Dow is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Causeway International Small 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 International 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 International Small 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 International i.e., Causeway International and Dow Jones go up and down completely randomly.
Pair Corralation between Causeway International and Dow Jones
Assuming the 90 days horizon Causeway International Small is expected to generate 1.11 times more return on investment than Dow Jones. However, Causeway International is 1.11 times more volatile than Dow Jones Industrial. It trades about 0.09 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 1,065 in Causeway International Small on August 30, 2024 and sell it today you would earn a total of 435.00 from holding Causeway International Small or generate 40.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Causeway International Small vs. Dow Jones Industrial
Performance |
| Timeline |
Causeway International and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Causeway International Small
Pair trading matchups for Causeway International
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Causeway International and Dow Jones
The main advantage of trading using opposite Causeway International and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Causeway International 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 International vs. Small Cap Stock | Causeway International vs. T Rowe Price | Causeway International vs. Vanguard Strategic Small Cap | Causeway International vs. Delaware Limited Term Diversified |
| 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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