Correlation Between Dow Jones and Capitol Series
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Capitol Series 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 Capitol Series 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 Capitol Series Trust, you can compare the effects of market volatilities on Dow Jones and Capitol Series 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 Capitol Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Capitol Series.
Diversification Opportunities for Dow Jones and Capitol Series
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dow and Capitol is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Capitol Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitol Series Trust 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 Capitol Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitol Series Trust has no effect on the direction of Dow Jones i.e., Dow Jones and Capitol Series go up and down completely randomly.
Pair Corralation between Dow Jones and Capitol Series
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.36 times more return on investment than Capitol Series. However, Dow Jones is 1.36 times more volatile than Capitol Series Trust. It trades about 0.37 of its potential returns per unit of risk. Capitol Series Trust is currently generating about 0.46 per unit of risk. If you would invest 4,179,460 in Dow Jones Industrial on September 3, 2024 and sell it today you would earn a total of 298,740 from holding Dow Jones Industrial or generate 7.15% 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. Capitol Series Trust
Performance |
| Timeline |
Dow Jones and Capitol Series Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Capitol Series Trust
Pair trading matchups for Capitol Series
Pair Trading with Dow Jones and Capitol Series
The main advantage of trading using opposite Dow Jones and Capitol Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Capitol Series 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 Capitol Series will offset losses from the drop in Capitol Series' long position.| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
| Capitol Series vs. First Trust LongShort | Capitol Series vs. Cambria Global Momentum | Capitol Series vs. Cambria Global Asset | Capitol Series vs. ProShares Hedge Replication |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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