Correlation Between Dow Jones and Profunds Short
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Profunds Short 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 Profunds Short 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 Profunds Short Bitcoin, you can compare the effects of market volatilities on Dow Jones and Profunds Short 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 Profunds Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Profunds Short.
Diversification Opportunities for Dow Jones and Profunds Short
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Dow and Profunds is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Profunds Short Bitcoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Profunds Short Bitcoin 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 Profunds Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Profunds Short Bitcoin has no effect on the direction of Dow Jones i.e., Dow Jones and Profunds Short go up and down completely randomly.
Pair Corralation between Dow Jones and Profunds Short
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.2 times more return on investment than Profunds Short. However, Dow Jones Industrial is 5.08 times less risky than Profunds Short. It trades about 0.1 of its potential returns per unit of risk. Profunds Short Bitcoin is currently generating about -0.1 per unit of risk. If you would invest 3,541,698 in Dow Jones Industrial on September 23, 2024 and sell it today you would earn a total of 742,328 from holding Dow Jones Industrial or generate 20.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Profunds Short Bitcoin
Performance |
| Timeline |
Dow Jones and Profunds Short Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Profunds Short Bitcoin
Pair trading matchups for Profunds Short
Pair Trading with Dow Jones and Profunds Short
The main advantage of trading using opposite Dow Jones and Profunds Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Profunds Short 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 Profunds Short will offset losses from the drop in Profunds Short's long position.| Dow Jones vs. Nok Airlines Public | Dow Jones vs. Alaska Air Group | Dow Jones vs. Universal Music Group | Dow Jones vs. Copa Holdings SA |
| Profunds Short vs. Short Real Estate | Profunds Short vs. Short Real Estate | Profunds Short vs. Ultrashort Mid Cap Profund | Profunds Short vs. Ultrashort Mid Cap Profund |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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