Correlation Between Dow Jones and Anchor Tactical
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Anchor Tactical 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 Anchor Tactical 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 Anchor Tactical Equity, you can compare the effects of market volatilities on Dow Jones and Anchor Tactical 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 Anchor Tactical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Anchor Tactical.
Diversification Opportunities for Dow Jones and Anchor Tactical
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dow and Anchor is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Anchor Tactical Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anchor Tactical Equity 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 Anchor Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anchor Tactical Equity has no effect on the direction of Dow Jones i.e., Dow Jones and Anchor Tactical go up and down completely randomly.
Pair Corralation between Dow Jones and Anchor Tactical
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.05 times more return on investment than Anchor Tactical. However, Dow Jones is 1.05 times more volatile than Anchor Tactical Equity. It trades about 0.08 of its potential returns per unit of risk. Anchor Tactical Equity is currently generating about 0.01 per unit of risk. If you would invest 3,394,710 in Dow Jones Industrial on August 25, 2024 and sell it today you would earn a total of 1,034,941 from holding Dow Jones Industrial or generate 30.49% 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. Anchor Tactical Equity
Performance |
| Timeline |
Dow Jones and Anchor Tactical Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Anchor Tactical Equity
Pair trading matchups for Anchor Tactical
Pair Trading with Dow Jones and Anchor Tactical
The main advantage of trading using opposite Dow Jones and Anchor Tactical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Anchor Tactical 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 Anchor Tactical will offset losses from the drop in Anchor Tactical's long position.| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
| Anchor Tactical vs. Anchor Tactical Credit | Anchor Tactical vs. Catalystmillburn Hedge Strategy | Anchor Tactical vs. Anchor Risk Managed | Anchor Tactical vs. Kensington Managed Income |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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