Correlation Between Dow Jones and Short Intermediate
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Short Intermediate 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 Short Intermediate 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 Short Intermediate Bond Fund, you can compare the effects of market volatilities on Dow Jones and Short Intermediate 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 Short Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Short Intermediate.
Diversification Opportunities for Dow Jones and Short Intermediate
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and Short is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Short Intermediate Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Intermediate Bond 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 Short Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Intermediate Bond has no effect on the direction of Dow Jones i.e., Dow Jones and Short Intermediate go up and down completely randomly.
Pair Corralation between Dow Jones and Short Intermediate
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 7.78 times more return on investment than Short Intermediate. However, Dow Jones is 7.78 times more volatile than Short Intermediate Bond Fund. It trades about 0.26 of its potential returns per unit of risk. Short Intermediate Bond Fund is currently generating about 0.12 per unit of risk. If you would invest 4,238,757 in Dow Jones Industrial on August 27, 2024 and sell it today you would earn a total of 234,900 from holding Dow Jones Industrial or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Short Intermediate Bond Fund
Performance |
| Timeline |
Dow Jones and Short Intermediate Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Short Intermediate Bond Fund
Pair trading matchups for Short Intermediate
Pair Trading with Dow Jones and Short Intermediate
The main advantage of trading using opposite Dow Jones and Short Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Short Intermediate 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 Short Intermediate will offset losses from the drop in Short Intermediate's long position.| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
| Short Intermediate vs. Small Pany Fund | Short Intermediate vs. Balanced Fund Institutional | Short Intermediate vs. Income Fund Institutional | Short Intermediate vs. Credit Suisse Floating |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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