Correlation Between Dow Jones and Dividend Performers
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Dividend Performers 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 Dividend Performers 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 Dividend Performers ETF, you can compare the effects of market volatilities on Dow Jones and Dividend Performers 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 Dividend Performers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Dividend Performers.
Diversification Opportunities for Dow Jones and Dividend Performers
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dow and Dividend is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Dividend Performers ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dividend Performers ETF 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 Dividend Performers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dividend Performers ETF has no effect on the direction of Dow Jones i.e., Dow Jones and Dividend Performers go up and down completely randomly.
Pair Corralation between Dow Jones and Dividend Performers
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.72 times less return on investment than Dividend Performers. But when comparing it to its historical volatility, Dow Jones Industrial is 1.69 times less risky than Dividend Performers. It trades about 0.08 of its potential returns per unit of risk. Dividend Performers ETF is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,273 in Dividend Performers ETF on September 14, 2024 and sell it today you would earn a total of 758.00 from holding Dividend Performers ETF or generate 59.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Dow Jones Industrial vs. Dividend Performers ETF
Performance |
| Timeline |
Dow Jones and Dividend Performers Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Dividend Performers ETF
Pair trading matchups for Dividend Performers
Pair Trading with Dow Jones and Dividend Performers
The main advantage of trading using opposite Dow Jones and Dividend Performers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Dividend Performers 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 Dividend Performers will offset losses from the drop in Dividend Performers' long position.| Dow Jones vs. Hurco Companies | Dow Jones vs. Tyson Foods | Dow Jones vs. MYR Group | Dow Jones vs. Cannae Holdings |
| Dividend Performers vs. Global X SP | Dividend Performers vs. Amplify CWP Enhanced | Dividend Performers vs. NEOS ETF Trust | Dividend Performers vs. FT Cboe Vest |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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