Correlation Between Dow Jones and Sextant Growth
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Sextant 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 Sextant 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 Sextant Growth Fund, you can compare the effects of market volatilities on Dow Jones and Sextant 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 Sextant Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Sextant Growth.
Diversification Opportunities for Dow Jones and Sextant Growth
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dow and Sextant is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Sextant Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sextant 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 Sextant Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sextant Growth has no effect on the direction of Dow Jones i.e., Dow Jones and Sextant Growth go up and down completely randomly.
Pair Corralation between Dow Jones and Sextant Growth
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.38 times less return on investment than Sextant Growth. But when comparing it to its historical volatility, Dow Jones Industrial is 1.38 times less risky than Sextant Growth. It trades about 0.12 of its potential returns per unit of risk. Sextant Growth Fund is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 4,367 in Sextant Growth Fund on September 15, 2024 and sell it today you would earn a total of 1,530 from holding Sextant Growth Fund or generate 35.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Sextant Growth Fund
Performance |
| Timeline |
Dow Jones and Sextant Growth Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Sextant Growth Fund
Pair trading matchups for Sextant Growth
Pair Trading with Dow Jones and Sextant Growth
The main advantage of trading using opposite Dow Jones and Sextant Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Sextant 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 Sextant Growth will offset losses from the drop in Sextant Growth's long position.| Dow Jones vs. Wallbox NV | Dow Jones vs. LithiumBank Resources Corp | Dow Jones vs. Marine Products | Dow Jones vs. Arrow Financial |
| Sextant Growth vs. Sextant International Fund | Sextant Growth vs. Sextant Bond Income | Sextant Growth vs. Teton Westwood Equity | Sextant Growth vs. Value Line Premier |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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