Correlation Between Dow Jones and Catalyst/map Global
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Catalyst/map Global 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 Catalyst/map Global 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 Catalystmap Global Balanced, you can compare the effects of market volatilities on Dow Jones and Catalyst/map Global 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 Catalyst/map Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Catalyst/map Global.
Diversification Opportunities for Dow Jones and Catalyst/map Global
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and Catalyst/map is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Catalystmap Global Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst/map Global 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 Catalyst/map Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst/map Global has no effect on the direction of Dow Jones i.e., Dow Jones and Catalyst/map Global go up and down completely randomly.
Pair Corralation between Dow Jones and Catalyst/map Global
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 3.57 times more return on investment than Catalyst/map Global. However, Dow Jones is 3.57 times more volatile than Catalystmap Global Balanced. It trades about 0.37 of its potential returns per unit of risk. Catalystmap Global Balanced is currently generating about 0.06 per unit of risk. If you would invest 4,179,460 in Dow Jones Industrial on September 5, 2024 and sell it today you would earn a total of 321,944 from holding Dow Jones Industrial or generate 7.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Catalystmap Global Balanced
Performance |
| Timeline |
Dow Jones and Catalyst/map Global Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Catalystmap Global Balanced
Pair trading matchups for Catalyst/map Global
Pair Trading with Dow Jones and Catalyst/map Global
The main advantage of trading using opposite Dow Jones and Catalyst/map Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Catalyst/map Global 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 Catalyst/map Global will offset losses from the drop in Catalyst/map Global's long position.| Dow Jones vs. Shake Shack | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. Dave Busters Entertainment | Dow Jones vs. Meli Hotels International |
| Catalyst/map Global vs. Catalystsmh High Income | Catalyst/map Global vs. Catalystsmh High Income | Catalyst/map Global vs. Catalystsmh High Income | Catalyst/map Global vs. Catalyst Mlp Infrastructure |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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