Correlation Between Dow Jones and Sit Mid
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Sit Mid 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 Sit Mid 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 Sit Mid Cap, you can compare the effects of market volatilities on Dow Jones and Sit Mid 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 Sit Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Sit Mid.
Diversification Opportunities for Dow Jones and Sit Mid
Almost no diversification
The 3 months correlation between Dow and SIT is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Sit Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Mid Cap 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 Sit Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Mid Cap has no effect on the direction of Dow Jones i.e., Dow Jones and Sit Mid go up and down completely randomly.
Pair Corralation between Dow Jones and Sit Mid
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.91 times more return on investment than Sit Mid. However, Dow Jones Industrial is 1.1 times less risky than Sit Mid. It trades about 0.27 of its potential returns per unit of risk. Sit Mid Cap is currently generating about 0.16 per unit of risk. If you would invest 4,223,305 in Dow Jones Industrial on August 30, 2024 and sell it today you would earn a total of 248,901 from holding Dow Jones Industrial or generate 5.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Sit Mid Cap
Performance |
| Timeline |
Dow Jones and Sit Mid Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Sit Mid Cap
Pair trading matchups for Sit Mid
Pair Trading with Dow Jones and Sit Mid
The main advantage of trading using opposite Dow Jones and Sit Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Sit Mid 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 Sit Mid will offset losses from the drop in Sit Mid's long position.| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
| Sit Mid vs. Live Oak Health | Sit Mid vs. Hartford Healthcare Hls | Sit Mid vs. Highland Longshort Healthcare | Sit Mid vs. Alphacentric Lifesci Healthcare |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Global Correlations Find global opportunities by holding instruments from different markets |