Correlation Between Dow Jones and IShares SP
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By analyzing existing cross correlation between Dow Jones Industrial and iShares SP 500, you can compare the effects of market volatilities on Dow Jones and IShares SP 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 SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and IShares SP.
Diversification Opportunities for Dow Jones and IShares SP
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and IShares is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and iShares SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SP 500 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 SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SP 500 has no effect on the direction of Dow Jones i.e., Dow Jones and IShares SP go up and down completely randomly.
Pair Corralation between Dow Jones and IShares SP
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.75 times more return on investment than IShares SP. However, Dow Jones Industrial is 1.34 times less risky than IShares SP. It trades about 0.08 of its potential returns per unit of risk. iShares SP 500 is currently generating about 0.04 per unit of risk. If you would invest 3,400,504 in Dow Jones Industrial on September 2, 2024 and sell it today you would earn a total of 1,090,561 from holding Dow Jones Industrial or generate 32.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 78.02% |
| Values | Daily Returns |
Dow Jones Industrial vs. iShares SP 500
Performance |
| Timeline |
Dow Jones and IShares SP Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
iShares SP 500
Pair trading matchups for IShares SP
Pair Trading with Dow Jones and IShares SP
The main advantage of trading using opposite Dow Jones and IShares SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, IShares SP 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 SP will offset losses from the drop in IShares SP's long position.| Dow Jones vs. Dream Finders Homes | Dow Jones vs. GEN Restaurant Group, | Dow Jones vs. National Beverage Corp | Dow Jones vs. BJs Restaurants |
| IShares SP vs. iShares MSCI ACWI | IShares SP vs. iShares NASDAQ 100 | IShares SP vs. iShares Core SP | IShares SP vs. iShares Healthcare Innovation |
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.
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