Correlation Between Dow Jones and Spectrum Fund
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Spectrum Fund 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 Spectrum Fund 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 Spectrum Fund Institutional, you can compare the effects of market volatilities on Dow Jones and Spectrum Fund 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 Spectrum Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Spectrum Fund.
Diversification Opportunities for Dow Jones and Spectrum Fund
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dow and Spectrum is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Spectrum Fund Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectrum Fund Instit 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 Spectrum Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectrum Fund Instit has no effect on the direction of Dow Jones i.e., Dow Jones and Spectrum Fund go up and down completely randomly.
Pair Corralation between Dow Jones and Spectrum Fund
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.79 times more return on investment than Spectrum Fund. However, Dow Jones Industrial is 1.27 times less risky than Spectrum Fund. It trades about 0.1 of its potential returns per unit of risk. Spectrum Fund Institutional is currently generating about 0.04 per unit of risk. If you would invest 3,181,914 in Dow Jones Industrial on November 30, 2024 and sell it today you would earn a total of 1,202,177 from holding Dow Jones Industrial or generate 37.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Dow Jones Industrial vs. Spectrum Fund Institutional
Performance |
| Timeline |
Dow Jones and Spectrum Fund Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Spectrum Fund Institutional
Pair trading matchups for Spectrum Fund
Pair Trading with Dow Jones and Spectrum Fund
The main advantage of trading using opposite Dow Jones and Spectrum Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Spectrum Fund 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 Spectrum Fund will offset losses from the drop in Spectrum Fund's long position.| Dow Jones vs. Cannae Holdings | Dow Jones vs. Fidus Investment Corp | Dow Jones vs. SEI Investments | Dow Jones vs. Cracker Barrel Old |
| Spectrum Fund vs. Credit Suisse Multialternative | Spectrum Fund vs. Glg Intl Small | Spectrum Fund vs. Nuveen North Carolina | Spectrum Fund vs. Victory Incore Fund |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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