Correlation Between Dow Jones and Pax Msci
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Pax Msci 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 Pax Msci 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 Pax Msci Eafe, you can compare the effects of market volatilities on Dow Jones and Pax Msci 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 Pax Msci. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Pax Msci.
Diversification Opportunities for Dow Jones and Pax Msci
Excellent diversification
The 3 months correlation between Dow and Pax is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Pax Msci Eafe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pax Msci Eafe 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 Pax Msci. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pax Msci Eafe has no effect on the direction of Dow Jones i.e., Dow Jones and Pax Msci go up and down completely randomly.
Pair Corralation between Dow Jones and Pax Msci
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.93 times more return on investment than Pax Msci. However, Dow Jones Industrial is 1.08 times less risky than Pax Msci. It trades about 0.17 of its potential returns per unit of risk. Pax Msci Eafe is currently generating about -0.13 per unit of risk. If you would invest 4,133,505 in Dow Jones Industrial on August 29, 2024 and sell it today you would earn a total of 352,526 from holding Dow Jones Industrial or generate 8.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Pax Msci Eafe
Performance |
| Timeline |
Dow Jones and Pax Msci Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pax Msci Eafe
Pair trading matchups for Pax Msci
Pair Trading with Dow Jones and Pax Msci
The main advantage of trading using opposite Dow Jones and Pax Msci positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Pax Msci 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 Pax Msci will offset losses from the drop in Pax Msci's long position.| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
| Pax Msci vs. Pax Global Environmental | Pax Msci vs. Pax Small Cap | Pax Msci vs. Pax Esg Beta | Pax Msci vs. Pax High Yield |
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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