Correlation Between Dow Jones and Wilshire International
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Wilshire International 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 Wilshire International 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 Wilshire International Equity, you can compare the effects of market volatilities on Dow Jones and Wilshire International 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 Wilshire International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Wilshire International.
Diversification Opportunities for Dow Jones and Wilshire International
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Wilshire is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Wilshire International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilshire International 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 Wilshire International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilshire International has no effect on the direction of Dow Jones i.e., Dow Jones and Wilshire International go up and down completely randomly.
Pair Corralation between Dow Jones and Wilshire International
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.35 times more return on investment than Wilshire International. However, Dow Jones is 1.35 times more volatile than Wilshire International Equity. It trades about 0.25 of its potential returns per unit of risk. Wilshire International Equity is currently generating about -0.15 per unit of risk. If you would invest 4,238,757 in Dow Jones Industrial on August 29, 2024 and sell it today you would earn a total of 233,449 from holding Dow Jones Industrial or generate 5.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Dow Jones Industrial vs. Wilshire International Equity
Performance |
| Timeline |
Dow Jones and Wilshire International Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Wilshire International Equity
Pair trading matchups for Wilshire International
Pair Trading with Dow Jones and Wilshire International
The main advantage of trading using opposite Dow Jones and Wilshire International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Wilshire International 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 Wilshire International will offset losses from the drop in Wilshire International's long position.| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
| Wilshire International vs. Siit Ultra Short | Wilshire International vs. Astor Longshort Fund | Wilshire International vs. Quantitative Longshort Equity | Wilshire International vs. Angel Oak Ultrashort |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Transaction History View history of all your transactions and understand their impact on performance |