Correlation Between Dow Jones and Psagot Index
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By analyzing existing cross correlation between Dow Jones Industrial and Psagot Index Funds, you can compare the effects of market volatilities on Dow Jones and Psagot Index 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 Psagot Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Psagot Index.
Diversification Opportunities for Dow Jones and Psagot Index
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dow and Psagot is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Psagot Index Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Psagot Index Funds 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 Psagot Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Psagot Index Funds has no effect on the direction of Dow Jones i.e., Dow Jones and Psagot Index go up and down completely randomly.
Pair Corralation between Dow Jones and Psagot Index
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 7.29 times more return on investment than Psagot Index. However, Dow Jones is 7.29 times more volatile than Psagot Index Funds. It trades about 0.34 of its potential returns per unit of risk. Psagot Index Funds is currently generating about 0.48 per unit of risk. If you would invest 4,179,460 in Dow Jones Industrial on September 5, 2024 and sell it today you would earn a total of 291,093 from holding Dow Jones Industrial or generate 6.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 68.18% |
| Values | Daily Returns |
Dow Jones Industrial vs. Psagot Index Funds
Performance |
| Timeline |
Dow Jones and Psagot Index Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Psagot Index Funds
Pair trading matchups for Psagot Index
Pair Trading with Dow Jones and Psagot Index
The main advantage of trading using opposite Dow Jones and Psagot Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Psagot Index 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 Psagot Index will offset losses from the drop in Psagot Index's long position.| Dow Jones vs. Shake Shack | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. Dave Busters Entertainment | Dow Jones vs. Meli Hotels International |
| Psagot Index vs. Psagot Index Funds | Psagot Index vs. Psagot Index Funds | Psagot Index vs. Psagot Index Funds | Psagot Index vs. Psagot Index Funds |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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