Correlation Between Capitol Series and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Capitol Series 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 Capitol Series and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capitol Series Trust and Dow Jones Industrial, you can compare the effects of market volatilities on Capitol Series 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 Capitol Series with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capitol Series and Dow Jones.
Diversification Opportunities for Capitol Series and Dow Jones
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Capitol and Dow is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Capitol Series Trust 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 Capitol Series 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 Capitol Series Trust 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 Capitol Series i.e., Capitol Series and Dow Jones go up and down completely randomly.
Pair Corralation between Capitol Series and Dow Jones
Considering the 90-day investment horizon Capitol Series Trust is expected to generate 1.48 times more return on investment than Dow Jones. However, Capitol Series is 1.48 times more volatile than Dow Jones Industrial. It trades about 0.21 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.16 per unit of risk. If you would invest 2,757 in Capitol Series Trust on August 26, 2024 and sell it today you would earn a total of 310.00 from holding Capitol Series Trust or generate 11.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capitol Series Trust vs. Dow Jones Industrial
Performance |
| Timeline |
Capitol Series and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Capitol Series Trust
Pair trading matchups for Capitol Series
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Capitol Series and Dow Jones
The main advantage of trading using opposite Capitol Series and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capitol Series 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.| Capitol Series vs. Ero Copper Corp | Capitol Series vs. First Trust Exchange Traded | Capitol Series vs. Aquagold International | Capitol Series vs. Morningstar Unconstrained Allocation |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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