Correlation Between Dow Jones and IShares Asia
Can any of the company-specific risk be diversified away by investing in both Dow Jones and IShares 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 IShares 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 iShares Asia Property, you can compare the effects of market volatilities on Dow Jones and IShares 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 IShares Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and IShares Asia.
Diversification Opportunities for Dow Jones and IShares Asia
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dow and IShares is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and iShares Asia Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Asia Property 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 IShares Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Asia Property has no effect on the direction of Dow Jones i.e., Dow Jones and IShares Asia go up and down completely randomly.
Pair Corralation between Dow Jones and IShares Asia
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.0 times more return on investment than IShares Asia. However, Dow Jones is 1.0 times more volatile than iShares Asia Property. It trades about 0.16 of its potential returns per unit of risk. iShares Asia Property is currently generating about 0.06 per unit of risk. If you would invest 3,857,103 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 633,962 from holding Dow Jones Industrial or generate 16.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 96.18% |
| Values | Daily Returns |
Dow Jones Industrial vs. iShares Asia Property
Performance |
| Timeline |
Dow Jones and IShares Asia Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
iShares Asia Property
Pair trading matchups for IShares Asia
Pair Trading with Dow Jones and IShares Asia
The main advantage of trading using opposite Dow Jones and IShares Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, IShares 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 IShares Asia will offset losses from the drop in IShares Asia's long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| IShares Asia vs. iShares Core MSCI | IShares Asia vs. BlackRock ESG Multi Asset | IShares Asia vs. Pershing Square Holdings | IShares Asia vs. ASML Holding NV |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |