Correlation Between Dow Jones and Sa Us
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Sa Us 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 Sa Us 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 Sa Mkt Fd, you can compare the effects of market volatilities on Dow Jones and Sa Us 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 Sa Us. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Sa Us.
Diversification Opportunities for Dow Jones and Sa Us
Almost no diversification
The 3 months correlation between Dow and SAMKX is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Sa Mkt Fd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sa Mkt Fd 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 Sa Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sa Mkt Fd has no effect on the direction of Dow Jones i.e., Dow Jones and Sa Us go up and down completely randomly.
Pair Corralation between Dow Jones and Sa Us
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.11 times more return on investment than Sa Us. However, Dow Jones is 1.11 times more volatile than Sa Mkt Fd. It trades about 0.29 of its potential returns per unit of risk. Sa Mkt Fd is currently generating about 0.19 per unit of risk. If you would invest 4,214,154 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 258,052 from holding Dow Jones Industrial or generate 6.12% 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. Sa Mkt Fd
Performance |
| Timeline |
Dow Jones and Sa Us Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Sa Mkt Fd
Pair trading matchups for Sa Us
Pair Trading with Dow Jones and Sa Us
The main advantage of trading using opposite Dow Jones and Sa Us positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Sa Us 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 Sa Us will offset losses from the drop in Sa Us' long position.| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
| Sa Us vs. Goldman Sachs Emerging | Sa Us vs. Black Oak Emerging | Sa Us vs. Angel Oak Multi Strategy | Sa Us vs. Calvert Emerging Markets |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |