Correlation Between Dow Jones and Cohen Steers
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Cohen Steers 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 Cohen Steers 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 Cohen Steers Global, you can compare the effects of market volatilities on Dow Jones and Cohen Steers 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 Cohen Steers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Cohen Steers.
Diversification Opportunities for Dow Jones and Cohen Steers
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Cohen is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Cohen Steers Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cohen Steers Global 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 Cohen Steers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cohen Steers Global has no effect on the direction of Dow Jones i.e., Dow Jones and Cohen Steers go up and down completely randomly.
Pair Corralation between Dow Jones and Cohen Steers
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the Cohen Steers. But the index apears to be less risky and, when comparing its historical volatility, Dow Jones Industrial is 1.1 times less risky than Cohen Steers. The index trades about -0.22 of its potential returns per unit of risk. The Cohen Steers Global is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 5,187 in Cohen Steers Global on November 27, 2024 and sell it today you would earn a total of 38.00 from holding Cohen Steers Global or generate 0.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Cohen Steers Global
Performance |
| Timeline |
Dow Jones and Cohen Steers Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Cohen Steers Global
Pair trading matchups for Cohen Steers
Pair Trading with Dow Jones and Cohen Steers
The main advantage of trading using opposite Dow Jones and Cohen Steers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Cohen Steers 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 Cohen Steers will offset losses from the drop in Cohen Steers' long position.The idea behind Dow Jones Industrial and Cohen Steers Global pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Cohen Steers vs. Rational Strategic Allocation | Cohen Steers vs. T Rowe Price | Cohen Steers vs. Gmo Asset Allocation | Cohen Steers vs. Balanced Allocation 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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