Correlation Between Dow Jones and Voya Asia
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Voya Asia 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 Voya Asia 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 Voya Asia Pacific, you can compare the effects of market volatilities on Dow Jones and Voya Asia 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 Voya Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Voya Asia.
Diversification Opportunities for Dow Jones and Voya Asia
Significant diversification
The 3 months correlation between Dow and Voya is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Voya Asia Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Asia Pacific 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 Voya Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Asia Pacific has no effect on the direction of Dow Jones i.e., Dow Jones and Voya Asia go up and down completely randomly.
Pair Corralation between Dow Jones and Voya Asia
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.76 times more return on investment than Voya Asia. However, Dow Jones Industrial is 1.31 times less risky than Voya Asia. It trades about 0.15 of its potential returns per unit of risk. Voya Asia Pacific is currently generating about 0.07 per unit of risk. If you would invest 3,870,327 in Dow Jones Industrial on November 3, 2024 and sell it today you would earn a total of 584,139 from holding Dow Jones Industrial or generate 15.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Dow Jones Industrial vs. Voya Asia Pacific
Performance |
| Timeline |
Dow Jones and Voya Asia Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Voya Asia Pacific
Pair trading matchups for Voya Asia
Pair Trading with Dow Jones and Voya Asia
The main advantage of trading using opposite Dow Jones and Voya Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Voya Asia 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 Voya Asia will offset losses from the drop in Voya Asia's long position.| Dow Jones vs. Cincinnati Financial | Dow Jones vs. Kellanova | Dow Jones vs. Acme United | Dow Jones vs. Procter Gamble |
| Voya Asia vs. The Gabelli Multimedia | Voya Asia vs. The Gabelli Equity | Voya Asia vs. Virtus AllianzGI Convertible | Voya Asia vs. The Gabelli Equity |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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