Correlation Between Dow Jones and Pro Dex
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Pro Dex 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 Pro Dex 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 Pro Dex, you can compare the effects of market volatilities on Dow Jones and Pro Dex 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 Pro Dex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Pro Dex.
Diversification Opportunities for Dow Jones and Pro Dex
Very weak diversification
The 3 months correlation between Dow and Pro is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Pro Dex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pro Dex 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 Pro Dex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pro Dex has no effect on the direction of Dow Jones i.e., Dow Jones and Pro Dex go up and down completely randomly.
Pair Corralation between Dow Jones and Pro Dex
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.12 times more return on investment than Pro Dex. However, Dow Jones Industrial is 8.52 times less risky than Pro Dex. It trades about 0.36 of its potential returns per unit of risk. Pro Dex is currently generating about -0.03 per unit of risk. If you would invest 4,254,422 in Dow Jones Industrial on November 1, 2024 and sell it today you would earn a total of 216,930 from holding Dow Jones Industrial or generate 5.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Pro Dex
Performance |
| Timeline |
Dow Jones and Pro Dex Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pro Dex
Pair trading matchups for Pro Dex
Pair Trading with Dow Jones and Pro Dex
The main advantage of trading using opposite Dow Jones and Pro Dex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Pro Dex 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 Pro Dex will offset losses from the drop in Pro Dex's long position.| Dow Jones vs. WEC Energy Group | Dow Jones vs. Pure Cycle | Dow Jones vs. Tandy Leather Factory | Dow Jones vs. Tapestry |
| Pro Dex vs. Coloplast A | Pro Dex vs. Straumann Holding AG | Pro Dex vs. Nephros | Pro Dex vs. InfuSystems Holdings |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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