Correlation Between Dow Jones and IPath Asian
Can any of the company-specific risk be diversified away by investing in both Dow Jones and IPath Asian 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 IPath Asian 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 IPath Asian Gulf, you can compare the effects of market volatilities on Dow Jones and IPath Asian 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 IPath Asian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and IPath Asian.
Diversification Opportunities for Dow Jones and IPath Asian
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and IPath is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and IPath Asian Gulf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IPath Asian Gulf 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 IPath Asian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IPath Asian Gulf has no effect on the direction of Dow Jones i.e., Dow Jones and IPath Asian go up and down completely randomly.
Pair Corralation between Dow Jones and IPath Asian
If you would invest 4,205,219 in Dow Jones Industrial on September 2, 2024 and sell it today you would earn a total of 285,846 from holding Dow Jones Industrial or generate 6.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Dow Jones Industrial vs. IPath Asian Gulf
Performance |
| Timeline |
Dow Jones and IPath Asian Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Dow Jones and IPath Asian
The main advantage of trading using opposite Dow Jones and IPath Asian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, IPath Asian 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 IPath Asian will offset losses from the drop in IPath Asian's long position.| Dow Jones vs. Dream Finders Homes | Dow Jones vs. GEN Restaurant Group, | Dow Jones vs. National Beverage Corp | Dow Jones vs. BJs Restaurants |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |