Correlation Between Us Large and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Us Large 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 Us Large and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Us Large Pany and Dow Jones Industrial, you can compare the effects of market volatilities on Us Large 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 Us Large with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Large and Dow Jones.
Diversification Opportunities for Us Large and Dow Jones
Almost no diversification
The 3 months correlation between DFUSX and Dow is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Us Large Pany 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 Us Large 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 Us Large Pany 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 Us Large i.e., Us Large and Dow Jones go up and down completely randomly.
Pair Corralation between Us Large and Dow Jones
Assuming the 90 days horizon Us Large is expected to generate 1.58 times less return on investment than Dow Jones. But when comparing it to its historical volatility, Us Large Pany is 1.1 times less risky than Dow Jones. It trades about 0.21 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 4,214,154 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 276,911 from holding Dow Jones Industrial or generate 6.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Us Large Pany vs. Dow Jones Industrial
Performance |
| Timeline |
Us Large and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Us Large Pany
Pair trading matchups for Us Large
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Us Large and Dow Jones
The main advantage of trading using opposite Us Large and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us Large 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.| Us Large vs. Us Large Cap | Us Large vs. Dfa International Small | Us Large vs. International Small Pany | Us Large vs. Us Micro Cap |
| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |