Correlation Between Dow Jones and ProShares Nasdaq
Can any of the company-specific risk be diversified away by investing in both Dow Jones and ProShares Nasdaq 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 ProShares Nasdaq 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 ProShares Nasdaq 100 High, you can compare the effects of market volatilities on Dow Jones and ProShares Nasdaq 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 ProShares Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and ProShares Nasdaq.
Diversification Opportunities for Dow Jones and ProShares Nasdaq
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dow and ProShares is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and ProShares Nasdaq 100 High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Nasdaq 100 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 ProShares Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Nasdaq 100 has no effect on the direction of Dow Jones i.e., Dow Jones and ProShares Nasdaq go up and down completely randomly.
Pair Corralation between Dow Jones and ProShares Nasdaq
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.67 times more return on investment than ProShares Nasdaq. However, Dow Jones Industrial is 1.49 times less risky than ProShares Nasdaq. It trades about 0.16 of its potential returns per unit of risk. ProShares Nasdaq 100 High is currently generating about 0.08 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 Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Dow Jones Industrial vs. ProShares Nasdaq 100 High
Performance |
| Timeline |
Dow Jones and ProShares Nasdaq Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
ProShares Nasdaq 100 High
Pair trading matchups for ProShares Nasdaq
Pair Trading with Dow Jones and ProShares Nasdaq
The main advantage of trading using opposite Dow Jones and ProShares Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, ProShares Nasdaq 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 ProShares Nasdaq will offset losses from the drop in ProShares Nasdaq's long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| ProShares Nasdaq vs. Global X SP | ProShares Nasdaq vs. Amplify CWP Enhanced | ProShares Nasdaq vs. JPMorgan Equity Premium |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |