Correlation Between Dow Jones and Simplify Exchange
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Simplify Exchange 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 Simplify Exchange 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 Simplify Exchange Traded, you can compare the effects of market volatilities on Dow Jones and Simplify Exchange 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 Simplify Exchange. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Simplify Exchange.
Diversification Opportunities for Dow Jones and Simplify Exchange
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Simplify is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Simplify Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Exchange Traded 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 Simplify Exchange. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Exchange Traded has no effect on the direction of Dow Jones i.e., Dow Jones and Simplify Exchange go up and down completely randomly.
Pair Corralation between Dow Jones and Simplify Exchange
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.73 times more return on investment than Simplify Exchange. However, Dow Jones is 1.73 times more volatile than Simplify Exchange Traded. It trades about 0.21 of its potential returns per unit of risk. Simplify Exchange Traded is currently generating about 0.11 per unit of risk. If you would invest 4,237,436 in Dow Jones Industrial on August 25, 2024 and sell it today you would earn a total of 192,215 from holding Dow Jones Industrial or generate 4.54% 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. Simplify Exchange Traded
Performance |
| Timeline |
Dow Jones and Simplify Exchange Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Simplify Exchange Traded
Pair trading matchups for Simplify Exchange
Pair Trading with Dow Jones and Simplify Exchange
The main advantage of trading using opposite Dow Jones and Simplify Exchange positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Simplify Exchange 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 Simplify Exchange will offset losses from the drop in Simplify Exchange'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 |
| Simplify Exchange vs. Tidal Trust II | Simplify Exchange vs. EA Series Trust | Simplify Exchange vs. ProShares VIX Mid Term | Simplify Exchange vs. ProShares VIX Short Term |
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
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |