Correlation Between Dow Jones and Managed Account
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Managed Account 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 Managed Account 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 Managed Account Series, you can compare the effects of market volatilities on Dow Jones and Managed Account 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 Managed Account. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Managed Account.
Diversification Opportunities for Dow Jones and Managed Account
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Managed is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Managed Account Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Managed Account Series 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 Managed Account. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Managed Account Series has no effect on the direction of Dow Jones i.e., Dow Jones and Managed Account go up and down completely randomly.
Pair Corralation between Dow Jones and Managed Account
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the Managed Account. In addition to that, Dow Jones is 3.61 times more volatile than Managed Account Series. It trades about -0.03 of its total potential returns per unit of risk. Managed Account Series is currently generating about -0.09 per unit of volatility. If you would invest 897.00 in Managed Account Series on November 4, 2024 and sell it today you would lose (7.00) from holding Managed Account Series or give up 0.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.56% |
| Values | Daily Returns |
Dow Jones Industrial vs. Managed Account Series
Performance |
| Timeline |
Dow Jones and Managed Account Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Managed Account Series
Pair trading matchups for Managed Account
Pair Trading with Dow Jones and Managed Account
The main advantage of trading using opposite Dow Jones and Managed Account positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Managed Account 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 Managed Account will offset losses from the drop in Managed Account's long position.| Dow Jones vs. Rambler Metals and | Dow Jones vs. Nicola Mining | Dow Jones vs. Old Dominion Freight | Dow Jones vs. United Guardian |
| Managed Account vs. Putnam Global Technology | Managed Account vs. Science Technology Fund | Managed Account vs. Fidelity Advisor Technology | Managed Account vs. Pgim Jennison Technology |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |