Correlation Between Dow Jones and Barclays Capital
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Barclays Capital 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 Barclays Capital 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 Barclays Capital, you can compare the effects of market volatilities on Dow Jones and Barclays Capital 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 Barclays Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Barclays Capital.
Diversification Opportunities for Dow Jones and Barclays Capital
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dow and Barclays is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Barclays Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays Capital 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 Barclays Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barclays Capital has no effect on the direction of Dow Jones i.e., Dow Jones and Barclays Capital go up and down completely randomly.
Pair Corralation between Dow Jones and Barclays Capital
If you would invest 3,885,286 in Dow Jones Industrial on August 24, 2024 and sell it today you would earn a total of 501,749 from holding Dow Jones Industrial or generate 12.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 0.8% |
| Values | Daily Returns |
Dow Jones Industrial vs. Barclays Capital
Performance |
| Timeline |
Dow Jones and Barclays Capital Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Dow Jones and Barclays Capital
The main advantage of trading using opposite Dow Jones and Barclays Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Barclays Capital 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 Barclays Capital will offset losses from the drop in Barclays Capital's long position.| Dow Jones vs. Barrick Gold Corp | Dow Jones vs. Jutal Offshore Oil | Dow Jones vs. Eastern Co | Dow Jones vs. Weyco Group |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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