Correlation Between Dow Jones and IShares MSCI
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By analyzing existing cross correlation between Dow Jones Industrial and iShares MSCI ACWI, you can compare the effects of market volatilities on Dow Jones and IShares MSCI 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 MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and IShares MSCI.
Diversification Opportunities for Dow Jones and IShares MSCI
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dow and IShares is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and iShares MSCI ACWI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI ACWI 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 MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI ACWI has no effect on the direction of Dow Jones i.e., Dow Jones and IShares MSCI go up and down completely randomly.
Pair Corralation between Dow Jones and IShares MSCI
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.84 times less return on investment than IShares MSCI. But when comparing it to its historical volatility, Dow Jones Industrial is 1.21 times less risky than IShares MSCI. It trades about 0.09 of its potential returns per unit of risk. iShares MSCI ACWI is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,153,000 in iShares MSCI ACWI on September 12, 2024 and sell it today you would earn a total of 1,130,000 from holding iShares MSCI ACWI or generate 52.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 77.94% |
| Values | Daily Returns |
Dow Jones Industrial vs. iShares MSCI ACWI
Performance |
| Timeline |
Dow Jones and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
iShares MSCI ACWI
Pair trading matchups for IShares MSCI
Pair Trading with Dow Jones and IShares MSCI
The main advantage of trading using opposite Dow Jones and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, IShares MSCI 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 MSCI will offset losses from the drop in IShares MSCI's long position.| Dow Jones vs. Aeye Inc | Dow Jones vs. Gentex | Dow Jones vs. Marine Products | Dow Jones vs. CarsalesCom Ltd ADR |
| IShares MSCI vs. Mivne Real Estate | IShares MSCI vs. Photomyne | IShares MSCI vs. Israel Land Development | IShares MSCI vs. Bezeq Israeli Telecommunication |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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