Correlation Between Dow Jones and Macquarie ETF
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Macquarie ETF 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 Macquarie ETF 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 Macquarie ETF Trust, you can compare the effects of market volatilities on Dow Jones and Macquarie ETF 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 Macquarie ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Macquarie ETF.
Diversification Opportunities for Dow Jones and Macquarie ETF
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Macquarie is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Macquarie ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie ETF Trust 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 Macquarie ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macquarie ETF Trust has no effect on the direction of Dow Jones i.e., Dow Jones and Macquarie ETF go up and down completely randomly.
Pair Corralation between Dow Jones and Macquarie ETF
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the Macquarie ETF. In addition to that, Dow Jones is 16.52 times more volatile than Macquarie ETF Trust. It trades about -0.25 of its total potential returns per unit of risk. Macquarie ETF Trust is currently generating about 0.17 per unit of volatility. If you would invest 2,520 in Macquarie ETF Trust on January 5, 2025 and sell it today you would earn a total of 15.00 from holding Macquarie ETF Trust or generate 0.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.73% |
| Values | Daily Returns |
Dow Jones Industrial vs. Macquarie ETF Trust
Performance |
| Timeline |
Dow Jones and Macquarie ETF Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Macquarie ETF Trust
Pair trading matchups for Macquarie ETF
Pair Trading with Dow Jones and Macquarie ETF
The main advantage of trading using opposite Dow Jones and Macquarie ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Macquarie ETF 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 Macquarie ETF will offset losses from the drop in Macquarie ETF's long position.| Dow Jones vs. HNI Corp | Dow Jones vs. Eastern Co | Dow Jones vs. Postal Realty Trust | Dow Jones vs. Fidelity National Financial |
| Macquarie ETF vs. SSGA Active Trust | Macquarie ETF vs. SPDR Nuveen Municipal | Macquarie ETF vs. iShares Short Maturity | Macquarie ETF vs. First Trust Flexible |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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