Correlation Between Dow Jones and Vanguard Intermediate-ter
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Vanguard Intermediate-ter 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 Vanguard Intermediate-ter 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 Vanguard Intermediate Term Treasury, you can compare the effects of market volatilities on Dow Jones and Vanguard Intermediate-ter 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 Vanguard Intermediate-ter. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Vanguard Intermediate-ter.
Diversification Opportunities for Dow Jones and Vanguard Intermediate-ter
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dow and Vanguard is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Vanguard Intermediate Term Tre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Intermediate-ter 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 Vanguard Intermediate-ter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Intermediate-ter has no effect on the direction of Dow Jones i.e., Dow Jones and Vanguard Intermediate-ter go up and down completely randomly.
Pair Corralation between Dow Jones and Vanguard Intermediate-ter
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.83 times more return on investment than Vanguard Intermediate-ter. However, Dow Jones is 1.83 times more volatile than Vanguard Intermediate Term Treasury. It trades about 0.08 of its potential returns per unit of risk. Vanguard Intermediate Term Treasury is currently generating about 0.03 per unit of risk. If you would invest 3,378,148 in Dow Jones Industrial on August 29, 2024 and sell it today you would earn a total of 1,107,883 from holding Dow Jones Industrial or generate 32.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Vanguard Intermediate Term Tre
Performance |
| Timeline |
Dow Jones and Vanguard Intermediate-ter Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Vanguard Intermediate Term Treasury
Pair trading matchups for Vanguard Intermediate-ter
Pair Trading with Dow Jones and Vanguard Intermediate-ter
The main advantage of trading using opposite Dow Jones and Vanguard Intermediate-ter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Vanguard Intermediate-ter 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 Vanguard Intermediate-ter will offset losses from the drop in Vanguard Intermediate-ter's long position.| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |