Correlation Between Dow Jones and ProShares Online
Can any of the company-specific risk be diversified away by investing in both Dow Jones and ProShares Online 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 ProShares Online 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 ProShares Online Retail, you can compare the effects of market volatilities on Dow Jones and ProShares Online 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 ProShares Online. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and ProShares Online.
Diversification Opportunities for Dow Jones and ProShares Online
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and ProShares is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and ProShares Online Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Online Retail 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 ProShares Online. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Online Retail has no effect on the direction of Dow Jones i.e., Dow Jones and ProShares Online go up and down completely randomly.
Pair Corralation between Dow Jones and ProShares Online
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.79 times more return on investment than ProShares Online. However, Dow Jones Industrial is 1.26 times less risky than ProShares Online. It trades about 0.27 of its potential returns per unit of risk. ProShares Online Retail is currently generating about 0.18 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. ProShares Online Retail
Performance |
| Timeline |
Dow Jones and ProShares Online Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
ProShares Online Retail
Pair trading matchups for ProShares Online
Pair Trading with Dow Jones and ProShares Online
The main advantage of trading using opposite Dow Jones and ProShares Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, ProShares Online 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 ProShares Online will offset losses from the drop in ProShares Online's long position.| Dow Jones vs. Skillful Craftsman Education | Dow Jones vs. Acco Brands | Dow Jones vs. Cracker Barrel Old | Dow Jones vs. Coursera |
| ProShares Online vs. Amplify Online Retail | ProShares Online vs. ProShares Long OnlineShort | ProShares Online vs. Global X E commerce | ProShares Online vs. WisdomTree Cloud Computing |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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