Correlation Between Dow Jones and Global Bond
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Global Bond 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 Global Bond 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 Global Bond Fund, you can compare the effects of market volatilities on Dow Jones and Global Bond 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 Global Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Global Bond.
Diversification Opportunities for Dow Jones and Global Bond
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dow and Global is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Global Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Bond Fund 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 Global Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Bond Fund has no effect on the direction of Dow Jones i.e., Dow Jones and Global Bond go up and down completely randomly.
Pair Corralation between Dow Jones and Global Bond
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the Global Bond. In addition to that, Dow Jones is 2.8 times more volatile than Global Bond Fund. It trades about -0.21 of its total potential returns per unit of risk. Global Bond Fund is currently generating about 0.27 per unit of volatility. If you would invest 861.00 in Global Bond Fund on November 28, 2024 and sell it today you would earn a total of 11.00 from holding Global Bond Fund or generate 1.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Global Bond Fund
Performance |
| Timeline |
Dow Jones and Global Bond Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Global Bond Fund
Pair trading matchups for Global Bond
Pair Trading with Dow Jones and Global Bond
The main advantage of trading using opposite Dow Jones and Global Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Global Bond 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 Global Bond will offset losses from the drop in Global Bond's long position.| Dow Jones vs. Starbucks | Dow Jones vs. Westinghouse Air Brake | Dow Jones vs. Finnair Oyj | Dow Jones vs. Mesa Air Group |
| Global Bond vs. Goldman Sachs Bond | Global Bond vs. Doubleline E Fixed | Global Bond vs. Doubleline Total Return | Global Bond vs. Intermediate Bond Fund |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |