Correlation Between Dow Jones and Causeway International
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Causeway International 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 Causeway International 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 Causeway International Value, you can compare the effects of market volatilities on Dow Jones and Causeway International 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 Causeway International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Causeway International.
Diversification Opportunities for Dow Jones and Causeway International
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dow and Causeway is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Causeway International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Causeway International 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 Causeway International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Causeway International has no effect on the direction of Dow Jones i.e., Dow Jones and Causeway International go up and down completely randomly.
Pair Corralation between Dow Jones and Causeway International
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.85 times more return on investment than Causeway International. However, Dow Jones Industrial is 1.18 times less risky than Causeway International. It trades about 0.12 of its potential returns per unit of risk. Causeway International Value is currently generating about 0.04 per unit of risk. If you would invest 3,464,197 in Dow Jones Industrial on August 29, 2024 and sell it today you would earn a total of 1,008,009 from holding Dow Jones Industrial or generate 29.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Causeway International Value
Performance |
| Timeline |
Dow Jones and Causeway International Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Causeway International Value
Pair trading matchups for Causeway International
Pair Trading with Dow Jones and Causeway International
The main advantage of trading using opposite Dow Jones and Causeway International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Causeway International 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 Causeway International will offset losses from the drop in Causeway International's long position.| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
| Causeway International vs. HUMANA INC | Causeway International vs. Aquagold International | Causeway International vs. Barloworld Ltd ADR | Causeway International vs. Morningstar Unconstrained Allocation |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |