Correlation Between Dow Jones and Fidelity Salem
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Fidelity Salem 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 Fidelity Salem 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 Fidelity Salem Street, you can compare the effects of market volatilities on Dow Jones and Fidelity Salem 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 Fidelity Salem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Fidelity Salem.
Diversification Opportunities for Dow Jones and Fidelity Salem
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dow and Fidelity is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Fidelity Salem Street in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Salem Street 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 Fidelity Salem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Salem Street has no effect on the direction of Dow Jones i.e., Dow Jones and Fidelity Salem go up and down completely randomly.
Pair Corralation between Dow Jones and Fidelity Salem
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.8 times more return on investment than Fidelity Salem. However, Dow Jones Industrial is 1.25 times less risky than Fidelity Salem. It trades about 0.11 of its potential returns per unit of risk. Fidelity Salem Street is currently generating about 0.03 per unit of risk. If you would invest 3,312,774 in Dow Jones Industrial on August 26, 2024 and sell it today you would earn a total of 1,116,877 from holding Dow Jones Industrial or generate 33.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Fidelity Salem Street
Performance |
| Timeline |
Dow Jones and Fidelity Salem Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Fidelity Salem Street
Pair trading matchups for Fidelity Salem
Pair Trading with Dow Jones and Fidelity Salem
The main advantage of trading using opposite Dow Jones and Fidelity Salem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Fidelity Salem 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 Fidelity Salem will offset losses from the drop in Fidelity Salem's long position.| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
| Fidelity Salem vs. Fidelity International Capital | Fidelity Salem vs. Fidelity Total International | Fidelity Salem vs. Fidelity Mega Cap | Fidelity Salem vs. Fidelity International Value |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |