Correlation Between Dow Jones and Tax-exempt Fund
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Tax-exempt 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 Tax-exempt 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 Tax Exempt Fund Of, you can compare the effects of market volatilities on Dow Jones and Tax-exempt 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 Tax-exempt Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Tax-exempt Fund.
Diversification Opportunities for Dow Jones and Tax-exempt Fund
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and Tax-exempt is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Tax Exempt Fund Of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tax Exempt Fund 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 Tax-exempt Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tax Exempt Fund has no effect on the direction of Dow Jones i.e., Dow Jones and Tax-exempt Fund go up and down completely randomly.
Pair Corralation between Dow Jones and Tax-exempt Fund
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 3.26 times more return on investment than Tax-exempt Fund. However, Dow Jones is 3.26 times more volatile than Tax Exempt Fund Of. It trades about 0.37 of its potential returns per unit of risk. Tax Exempt Fund Of is currently generating about 0.19 per unit of risk. If you would invest 4,176,346 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 314,719 from holding Dow Jones Industrial or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dow Jones Industrial vs. Tax Exempt Fund Of
Performance |
| Timeline |
Dow Jones and Tax-exempt Fund Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Tax Exempt Fund Of
Pair trading matchups for Tax-exempt Fund
Pair Trading with Dow Jones and Tax-exempt Fund
The main advantage of trading using opposite Dow Jones and Tax-exempt Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Tax-exempt 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 Tax-exempt Fund will offset losses from the drop in Tax-exempt Fund's long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| Tax-exempt Fund vs. Income Fund Of | Tax-exempt Fund vs. New World Fund | Tax-exempt Fund vs. American Mutual Fund | Tax-exempt Fund vs. American Mutual 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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |