Correlation Between Dow Jones and Polen Global
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Polen Global 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 Polen Global 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 Polen Global Growth, you can compare the effects of market volatilities on Dow Jones and Polen Global 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 Polen Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Polen Global.
Diversification Opportunities for Dow Jones and Polen Global
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dow and POLEN is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Polen Global Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polen Global Growth 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 Polen Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polen Global Growth has no effect on the direction of Dow Jones i.e., Dow Jones and Polen Global go up and down completely randomly.
Pair Corralation between Dow Jones and Polen Global
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.1 times more return on investment than Polen Global. However, Dow Jones is 1.1 times more volatile than Polen Global Growth. It trades about 0.34 of its potential returns per unit of risk. Polen Global Growth is currently generating about 0.29 per unit of risk. 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 Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Polen Global Growth
Performance |
| Timeline |
Dow Jones and Polen Global Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Polen Global Growth
Pair trading matchups for Polen Global
Pair Trading with Dow Jones and Polen Global
The main advantage of trading using opposite Dow Jones and Polen Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Polen Global 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 Polen Global will offset losses from the drop in Polen Global'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 |
| Polen Global vs. Polen Growth Fund | Polen Global vs. Baron Global Advantage | Polen Global vs. Polen Growth Fund | Polen Global vs. Hennessy Japan Fund |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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