Correlation Between Dow Jones and Simon Property
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Simon Property 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 Simon Property 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 Simon Property Group, you can compare the effects of market volatilities on Dow Jones and Simon Property 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 Simon Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Simon Property.
Diversification Opportunities for Dow Jones and Simon Property
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dow and Simon is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Simon Property Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simon Property Group 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 Simon Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simon Property Group has no effect on the direction of Dow Jones i.e., Dow Jones and Simon Property go up and down completely randomly.
Pair Corralation between Dow Jones and Simon Property
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.38 times more return on investment than Simon Property. However, Dow Jones is 1.38 times more volatile than Simon Property Group. It trades about 0.27 of its potential returns per unit of risk. Simon Property Group is currently generating about -0.13 per unit of risk. If you would invest 4,223,305 in Dow Jones Industrial on August 30, 2024 and sell it today you would earn a total of 248,901 from holding Dow Jones Industrial or generate 5.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Simon Property Group
Performance |
| Timeline |
Dow Jones and Simon Property Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Simon Property Group
Pair trading matchups for Simon Property
Pair Trading with Dow Jones and Simon Property
The main advantage of trading using opposite Dow Jones and Simon Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Simon Property 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 Simon Property will offset losses from the drop in Simon Property's long position.| Dow Jones vs. Skillful Craftsman Education | Dow Jones vs. Acco Brands | Dow Jones vs. Cracker Barrel Old | Dow Jones vs. Coursera |
| Simon Property vs. Saul Centers | Simon Property vs. Kimco Realty | Simon Property vs. Wheeler Real Estate | Simon Property vs. Macerich Company |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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