Correlation Between Dow Jones and Jackson Square
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Jackson Square 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 Jackson Square 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 Jackson Square Large Cap, you can compare the effects of market volatilities on Dow Jones and Jackson Square 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 Jackson Square. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Jackson Square.
Diversification Opportunities for Dow Jones and Jackson Square
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dow and Jackson is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Jackson Square Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jackson Square Large 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 Jackson Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jackson Square Large has no effect on the direction of Dow Jones i.e., Dow Jones and Jackson Square go up and down completely randomly.
Pair Corralation between Dow Jones and Jackson Square
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.16 times more return on investment than Jackson Square. However, Dow Jones is 1.16 times more volatile than Jackson Square Large Cap. It trades about 0.37 of its potential returns per unit of risk. Jackson Square Large Cap is currently generating about 0.29 per unit of risk. If you would invest 4,179,460 in Dow Jones Industrial on September 5, 2024 and sell it today you would earn a total of 321,944 from holding Dow Jones Industrial or generate 7.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dow Jones Industrial vs. Jackson Square Large Cap
Performance |
| Timeline |
Dow Jones and Jackson Square Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Jackson Square Large Cap
Pair trading matchups for Jackson Square
Pair Trading with Dow Jones and Jackson Square
The main advantage of trading using opposite Dow Jones and Jackson Square positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Jackson Square 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 Jackson Square will offset losses from the drop in Jackson Square's long position.| Dow Jones vs. Shake Shack | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. Dave Busters Entertainment | Dow Jones vs. Meli Hotels International |
| Jackson Square vs. Jackson Square Smid Cap | Jackson Square vs. Jackson Square Smid Cap | Jackson Square vs. Jackson Square Smid Cap |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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