Correlation Between Dow Jones and Performance Trust
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Performance Trust 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 Performance Trust 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 Performance Trust Strategic, you can compare the effects of market volatilities on Dow Jones and Performance Trust 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 Performance Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Performance Trust.
Diversification Opportunities for Dow Jones and Performance Trust
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dow and Performance is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Performance Trust Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Trust 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 Performance Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Performance Trust has no effect on the direction of Dow Jones i.e., Dow Jones and Performance Trust go up and down completely randomly.
Pair Corralation between Dow Jones and Performance Trust
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 3.07 times more return on investment than Performance Trust. However, Dow Jones is 3.07 times more volatile than Performance Trust Strategic. It trades about 0.24 of its potential returns per unit of risk. Performance Trust Strategic is currently generating about -0.05 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 Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Performance Trust Strategic
Performance |
| Timeline |
Dow Jones and Performance Trust Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Performance Trust Strategic
Pair trading matchups for Performance Trust
Pair Trading with Dow Jones and Performance Trust
The main advantage of trading using opposite Dow Jones and Performance Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Performance Trust 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 Performance Trust will offset losses from the drop in Performance Trust'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 |
| Performance Trust vs. Alphacentric Income Opportunities | Performance Trust vs. Performance Trust Municipal | Performance Trust vs. Guggenheim Total Return | Performance Trust vs. Pimco Income 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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