Correlation Between Dow Jones and SGI Dynamic
Can any of the company-specific risk be diversified away by investing in both Dow Jones and SGI Dynamic 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 SGI Dynamic 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 SGI Dynamic Tactical, you can compare the effects of market volatilities on Dow Jones and SGI Dynamic 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 SGI Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and SGI Dynamic.
Diversification Opportunities for Dow Jones and SGI Dynamic
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dow and SGI is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and SGI Dynamic Tactical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SGI Dynamic Tactical 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 SGI Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SGI Dynamic Tactical has no effect on the direction of Dow Jones i.e., Dow Jones and SGI Dynamic go up and down completely randomly.
Pair Corralation between Dow Jones and SGI Dynamic
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.9 times more return on investment than SGI Dynamic. However, Dow Jones Industrial is 1.11 times less risky than SGI Dynamic. It trades about 0.12 of its potential returns per unit of risk. SGI Dynamic Tactical is currently generating about 0.11 per unit of risk. If you would invest 3,640,493 in Dow Jones Industrial on September 4, 2024 and sell it today you would earn a total of 837,707 from holding Dow Jones Industrial or generate 23.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. SGI Dynamic Tactical
Performance |
| Timeline |
Dow Jones and SGI Dynamic Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
SGI Dynamic Tactical
Pair trading matchups for SGI Dynamic
Pair Trading with Dow Jones and SGI Dynamic
The main advantage of trading using opposite Dow Jones and SGI Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, SGI Dynamic 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 SGI Dynamic will offset losses from the drop in SGI Dynamic's long position.| Dow Jones vs. Gentex | Dow Jones vs. American Axle Manufacturing | Dow Jones vs. Pearson PLC ADR | Dow Jones vs. Marine Products |
| SGI Dynamic vs. iShares Core Aggressive | SGI Dynamic vs. Tidal Trust II | SGI Dynamic vs. SPDR SSgA Multi Asset | SGI Dynamic vs. SPDR SSgA Global |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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