Correlation Between Dow Jones and ProShares Decline
Can any of the company-specific risk be diversified away by investing in both Dow Jones and ProShares Decline 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 ProShares Decline 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 ProShares Decline of, you can compare the effects of market volatilities on Dow Jones and ProShares Decline 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 ProShares Decline. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and ProShares Decline.
Diversification Opportunities for Dow Jones and ProShares Decline
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Dow and ProShares is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and ProShares Decline of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Decline 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 ProShares Decline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Decline has no effect on the direction of Dow Jones i.e., Dow Jones and ProShares Decline go up and down completely randomly.
Pair Corralation between Dow Jones and ProShares Decline
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.58 times more return on investment than ProShares Decline. However, Dow Jones Industrial is 1.72 times less risky than ProShares Decline. It trades about 0.08 of its potential returns per unit of risk. ProShares Decline of is currently generating about 0.0 per unit of risk. If you would invest 3,347,646 in Dow Jones Industrial on August 30, 2024 and sell it today you would earn a total of 1,124,560 from holding Dow Jones Industrial or generate 33.59% 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. ProShares Decline of
Performance |
| Timeline |
Dow Jones and ProShares Decline Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
ProShares Decline of
Pair trading matchups for ProShares Decline
Pair Trading with Dow Jones and ProShares Decline
The main advantage of trading using opposite Dow Jones and ProShares Decline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, ProShares Decline 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 ProShares Decline will offset losses from the drop in ProShares Decline's long position.| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
| ProShares Decline vs. ProShares Long OnlineShort | ProShares Decline vs. ProShares Short High | ProShares Decline vs. ProShares Short Real | ProShares Decline vs. ProShares Short Financials |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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