Correlation Between Dow Jones and Wheaton Precious
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Wheaton Precious 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 Wheaton Precious 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 Wheaton Precious Metals, you can compare the effects of market volatilities on Dow Jones and Wheaton Precious 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 Wheaton Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Wheaton Precious.
Diversification Opportunities for Dow Jones and Wheaton Precious
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dow and Wheaton is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Wheaton Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wheaton Precious Metals 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 Wheaton Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wheaton Precious Metals has no effect on the direction of Dow Jones i.e., Dow Jones and Wheaton Precious go up and down completely randomly.
Pair Corralation between Dow Jones and Wheaton Precious
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.56 times more return on investment than Wheaton Precious. However, Dow Jones Industrial is 1.79 times less risky than Wheaton Precious. It trades about 0.34 of its potential returns per unit of risk. Wheaton Precious Metals is currently generating about -0.08 per unit of risk. If you would invest 4,205,219 in Dow Jones Industrial on September 2, 2024 and sell it today you would earn a total of 285,846 from holding Dow Jones Industrial or generate 6.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dow Jones Industrial vs. Wheaton Precious Metals
Performance |
| Timeline |
Dow Jones and Wheaton Precious Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Wheaton Precious Metals
Pair trading matchups for Wheaton Precious
Pair Trading with Dow Jones and Wheaton Precious
The main advantage of trading using opposite Dow Jones and Wheaton Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Wheaton Precious 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 Wheaton Precious will offset losses from the drop in Wheaton Precious' long position.| Dow Jones vs. Dream Finders Homes | Dow Jones vs. GEN Restaurant Group, | Dow Jones vs. National Beverage Corp | Dow Jones vs. BJs Restaurants |
| Wheaton Precious vs. ZIJIN MINH UNSPADR20 | Wheaton Precious vs. Superior Plus Corp | Wheaton Precious vs. NMI Holdings | Wheaton Precious vs. Origin Agritech |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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