Correlation Between Dow Jones and Themes Cybersecurity
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Themes Cybersecurity 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 Themes Cybersecurity 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 Themes Cybersecurity ETF, you can compare the effects of market volatilities on Dow Jones and Themes Cybersecurity 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 Themes Cybersecurity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Themes Cybersecurity.
Diversification Opportunities for Dow Jones and Themes Cybersecurity
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Themes is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Themes Cybersecurity ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Themes Cybersecurity ETF 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 Themes Cybersecurity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Themes Cybersecurity ETF has no effect on the direction of Dow Jones i.e., Dow Jones and Themes Cybersecurity go up and down completely randomly.
Pair Corralation between Dow Jones and Themes Cybersecurity
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.46 times less return on investment than Themes Cybersecurity. But when comparing it to its historical volatility, Dow Jones Industrial is 1.75 times less risky than Themes Cybersecurity. It trades about 0.09 of its potential returns per unit of risk. Themes Cybersecurity ETF is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,519 in Themes Cybersecurity ETF on November 19, 2024 and sell it today you would earn a total of 749.80 from holding Themes Cybersecurity ETF or generate 29.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 60.08% |
| Values | Daily Returns |
Dow Jones Industrial vs. Themes Cybersecurity ETF
Performance |
| Timeline |
Dow Jones and Themes Cybersecurity Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Themes Cybersecurity ETF
Pair trading matchups for Themes Cybersecurity
Pair Trading with Dow Jones and Themes Cybersecurity
The main advantage of trading using opposite Dow Jones and Themes Cybersecurity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Themes Cybersecurity 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 Themes Cybersecurity will offset losses from the drop in Themes Cybersecurity's long position.| Dow Jones vs. National CineMedia | Dow Jones vs. Emerson Radio | Dow Jones vs. Space Communication | Dow Jones vs. JD Sports Fashion |
| Themes Cybersecurity vs. iShares Dividend and | Themes Cybersecurity vs. Martin Currie Sustainable | Themes Cybersecurity vs. VictoryShares THB Mid | Themes Cybersecurity vs. Mast Global Battery |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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