Correlation Between Dow Jones and 361 Global
Can any of the company-specific risk be diversified away by investing in both Dow Jones and 361 Global 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 Dow Jones and 361 Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and 361 Global Longshort, you can compare the effects of market volatilities on Dow Jones and 361 Global 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 Dow Jones with a short position of 361 Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and 361 Global.
Diversification Opportunities for Dow Jones and 361 Global
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dow and 361 is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and 361 Global Longshort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 361 Global Longshort and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with 361 Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 361 Global Longshort has no effect on the direction of Dow Jones i.e., Dow Jones and 361 Global go up and down completely randomly.
Pair Corralation between Dow Jones and 361 Global
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 2.01 times more return on investment than 361 Global. However, Dow Jones is 2.01 times more volatile than 361 Global Longshort. It trades about 0.35 of its potential returns per unit of risk. 361 Global Longshort is currently generating about 0.08 per unit of risk. If you would invest 4,179,460 in Dow Jones Industrial on September 4, 2024 and sell it today you would earn a total of 291,093 from holding Dow Jones Industrial or generate 6.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Dow Jones Industrial vs. 361 Global Longshort
Performance |
| Timeline |
Dow Jones and 361 Global Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
361 Global Longshort
Pair trading matchups for 361 Global
Pair Trading with Dow Jones and 361 Global
The main advantage of trading using opposite Dow Jones and 361 Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, 361 Global 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 361 Global will offset losses from the drop in 361 Global's long position.| Dow Jones vs. Gentex | Dow Jones vs. American Axle Manufacturing | Dow Jones vs. Pearson PLC ADR | Dow Jones vs. Marine Products |
| 361 Global vs. 361 Global Longshort | 361 Global vs. Swan Defined Risk | 361 Global vs. Boston Partners Longshort | 361 Global vs. 361 Global Longshort |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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