Correlation Between Dow Jones and Strategy Shares
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Strategy Shares 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 Strategy Shares 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 Strategy Shares Gold Hedged, you can compare the effects of market volatilities on Dow Jones and Strategy Shares 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 Strategy Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Strategy Shares.
Diversification Opportunities for Dow Jones and Strategy Shares
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Strategy is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Strategy Shares Gold Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategy Shares Gold 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 Strategy Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategy Shares Gold has no effect on the direction of Dow Jones i.e., Dow Jones and Strategy Shares go up and down completely randomly.
Pair Corralation between Dow Jones and Strategy Shares
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.71 times more return on investment than Strategy Shares. However, Dow Jones Industrial is 1.42 times less risky than Strategy Shares. It trades about 0.11 of its potential returns per unit of risk. Strategy Shares Gold Hedged is currently generating about 0.07 per unit of risk. If you would invest 3,406,633 in Dow Jones Industrial on September 2, 2024 and sell it today you would earn a total of 1,084,432 from holding Dow Jones Industrial or generate 31.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 77.96% |
| Values | Daily Returns |
Dow Jones Industrial vs. Strategy Shares Gold Hedged
Performance |
| Timeline |
Dow Jones and Strategy Shares Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Strategy Shares Gold Hedged
Pair trading matchups for Strategy Shares
Pair Trading with Dow Jones and Strategy Shares
The main advantage of trading using opposite Dow Jones and Strategy Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Strategy Shares 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 Strategy Shares will offset losses from the drop in Strategy Shares' long position.| Dow Jones vs. Dream Finders Homes | Dow Jones vs. GEN Restaurant Group, | Dow Jones vs. National Beverage Corp | Dow Jones vs. BJs Restaurants |
| Strategy Shares vs. Global Blockchain Acquisition | Strategy Shares vs. First Trust Lunt | Strategy Shares vs. Great Southern Bancorp | Strategy Shares vs. RiverFront Strategic Income |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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