Correlation Between Dow Jones and Virtus Kar
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Virtus Kar 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 Virtus Kar 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 Virtus Kar Small Cap, you can compare the effects of market volatilities on Dow Jones and Virtus Kar 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 Virtus Kar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Virtus Kar.
Diversification Opportunities for Dow Jones and Virtus Kar
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dow and Virtus is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Virtus Kar Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Kar Small 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 Virtus Kar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Kar Small has no effect on the direction of Dow Jones i.e., Dow Jones and Virtus Kar go up and down completely randomly.
Pair Corralation between Dow Jones and Virtus Kar
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.1 times less return on investment than Virtus Kar. But when comparing it to its historical volatility, Dow Jones Industrial is 1.5 times less risky than Virtus Kar. It trades about 0.08 of its potential returns per unit of risk. Virtus Kar Small Cap is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,237 in Virtus Kar Small Cap on August 25, 2024 and sell it today you would earn a total of 1,038 from holding Virtus Kar Small Cap or generate 32.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Virtus Kar Small Cap
Performance |
| Timeline |
Dow Jones and Virtus Kar Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Virtus Kar Small Cap
Pair trading matchups for Virtus Kar
Pair Trading with Dow Jones and Virtus Kar
The main advantage of trading using opposite Dow Jones and Virtus Kar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Virtus Kar 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 Virtus Kar will offset losses from the drop in Virtus Kar's long position.| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
| Virtus Kar vs. Virtus Kar Small Cap | Virtus Kar vs. Virtus Kar Small Cap | Virtus Kar vs. Virtus Kar Mid Cap | Virtus Kar vs. Virtus Kar Small Cap |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |