Correlation Between Dow Jones and Cartesian Growth
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Cartesian Growth 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 Cartesian Growth 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 Cartesian Growth, you can compare the effects of market volatilities on Dow Jones and Cartesian Growth 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 Cartesian Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Cartesian Growth.
Diversification Opportunities for Dow Jones and Cartesian Growth
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dow and Cartesian is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Cartesian Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cartesian Growth 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 Cartesian Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cartesian Growth has no effect on the direction of Dow Jones i.e., Dow Jones and Cartesian Growth go up and down completely randomly.
Pair Corralation between Dow Jones and Cartesian Growth
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.7 times more return on investment than Cartesian Growth. However, Dow Jones Industrial is 1.43 times less risky than Cartesian Growth. It trades about 0.24 of its potential returns per unit of risk. Cartesian Growth is currently generating about -0.2 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. Cartesian Growth
Performance |
| Timeline |
Dow Jones and Cartesian Growth Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Cartesian Growth
Pair trading matchups for Cartesian Growth
Pair Trading with Dow Jones and Cartesian Growth
The main advantage of trading using opposite Dow Jones and Cartesian Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Cartesian Growth 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 Cartesian Growth will offset losses from the drop in Cartesian Growth's long position.| Dow Jones vs. MI Homes | Dow Jones vs. Franklin Street Properties | Dow Jones vs. Summit Hotel Properties | Dow Jones vs. Portillos |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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