Correlation Between Multi Manager and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Multi Manager 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 Multi Manager and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multi Manager Growth Strategies and Dow Jones Industrial, you can compare the effects of market volatilities on Multi Manager 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 Multi Manager with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi Manager and Dow Jones.
Diversification Opportunities for Multi Manager and Dow Jones
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Multi and Dow is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Multi Manager Growth Strategie 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 Multi Manager 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 Multi Manager Growth Strategies 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 Multi Manager i.e., Multi Manager and Dow Jones go up and down completely randomly.
Pair Corralation between Multi Manager and Dow Jones
Assuming the 90 days horizon Multi Manager is expected to generate 1.24 times less return on investment than Dow Jones. In addition to that, Multi Manager is 1.13 times more volatile than Dow Jones Industrial. It trades about 0.19 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.26 per unit of volatility. If you would invest 4,238,757 in Dow Jones Industrial on August 29, 2024 and sell it today you would earn a total of 247,274 from holding Dow Jones Industrial or generate 5.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multi Manager Growth Strategie vs. Dow Jones Industrial
Performance |
| Timeline |
Multi Manager and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Multi Manager Growth Strategies
Pair trading matchups for Multi Manager
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Multi Manager and Dow Jones
The main advantage of trading using opposite Multi Manager and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multi Manager 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.| Multi Manager vs. Hartford Moderate Allocation | Multi Manager vs. Fidelity Managed Retirement | Multi Manager vs. Dimensional Retirement Income | Multi Manager vs. American Funds Retirement |
| 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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