Correlation Between Dow Jones and Westcore Municipal
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Westcore Municipal 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 Westcore Municipal 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 Westcore Municipal Opportunities, you can compare the effects of market volatilities on Dow Jones and Westcore Municipal 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 Westcore Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Westcore Municipal.
Diversification Opportunities for Dow Jones and Westcore Municipal
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Westcore is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Westcore Municipal Opportuniti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westcore Municipal 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 Westcore Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westcore Municipal has no effect on the direction of Dow Jones i.e., Dow Jones and Westcore Municipal go up and down completely randomly.
Pair Corralation between Dow Jones and Westcore Municipal
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 4.1 times more return on investment than Westcore Municipal. However, Dow Jones is 4.1 times more volatile than Westcore Municipal Opportunities. It trades about 0.09 of its potential returns per unit of risk. Westcore Municipal Opportunities is currently generating about 0.09 per unit of risk. If you would invest 3,326,977 in Dow Jones Industrial on August 26, 2024 and sell it today you would earn a total of 1,102,674 from holding Dow Jones Industrial or generate 33.14% 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. Westcore Municipal Opportuniti
Performance |
| Timeline |
Dow Jones and Westcore Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Westcore Municipal Opportunities
Pair trading matchups for Westcore Municipal
Pair Trading with Dow Jones and Westcore Municipal
The main advantage of trading using opposite Dow Jones and Westcore Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Westcore Municipal 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 Westcore Municipal will offset losses from the drop in Westcore Municipal's long position.| Dow Jones vs. MI Homes | Dow Jones vs. Franklin Street Properties | Dow Jones vs. Summit Hotel Properties | Dow Jones vs. Portillos |
| Westcore Municipal vs. Ultra Short Term Fixed | Westcore Municipal vs. Calvert Short Duration | Westcore Municipal vs. Rbc Short Duration | Westcore Municipal vs. Short Intermediate Bond 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.
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