Correlation Between Dow Jones and Pacer Swan
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Pacer Swan 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 Pacer Swan 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 Pacer Swan SOS, you can compare the effects of market volatilities on Dow Jones and Pacer Swan 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 Pacer Swan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Pacer Swan.
Diversification Opportunities for Dow Jones and Pacer Swan
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dow and Pacer is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Pacer Swan SOS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Swan SOS 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 Pacer Swan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Swan SOS has no effect on the direction of Dow Jones i.e., Dow Jones and Pacer Swan go up and down completely randomly.
Pair Corralation between Dow Jones and Pacer Swan
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 2.36 times more return on investment than Pacer Swan. However, Dow Jones is 2.36 times more volatile than Pacer Swan SOS. It trades about 0.24 of its potential returns per unit of risk. Pacer Swan SOS is currently generating about 0.17 per unit of risk. If you would invest 4,211,440 in Dow Jones Industrial on August 26, 2024 and sell it today you would earn a total of 218,211 from holding Dow Jones Industrial or generate 5.18% 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. Pacer Swan SOS
Performance |
| Timeline |
Dow Jones and Pacer Swan Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pacer Swan SOS
Pair trading matchups for Pacer Swan
Pair Trading with Dow Jones and Pacer Swan
The main advantage of trading using opposite Dow Jones and Pacer Swan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Pacer Swan 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 Pacer Swan will offset losses from the drop in Pacer Swan's long position.| Dow Jones vs. MI Homes | Dow Jones vs. Franklin Street Properties | Dow Jones vs. Summit Hotel Properties | Dow Jones vs. Portillos |
| Pacer Swan vs. FT Vest Equity | Pacer Swan vs. Northern Lights | Pacer Swan vs. Dimensional International High | Pacer Swan vs. First Trust Exchange Traded |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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