Correlation Between Dow Jones and ETC On
Can any of the company-specific risk be diversified away by investing in both Dow Jones and ETC On 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 ETC On 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 ETC on CMCI, you can compare the effects of market volatilities on Dow Jones and ETC On 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 ETC On. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and ETC On.
Diversification Opportunities for Dow Jones and ETC On
Good diversification
The 3 months correlation between Dow and ETC is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and ETC on CMCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETC on CMCI 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 ETC On. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETC on CMCI has no effect on the direction of Dow Jones i.e., Dow Jones and ETC On go up and down completely randomly.
Pair Corralation between Dow Jones and ETC On
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.51 times less return on investment than ETC On. But when comparing it to its historical volatility, Dow Jones Industrial is 1.47 times less risky than ETC On. It trades about 0.11 of its potential returns per unit of risk. ETC on CMCI is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,754 in ETC on CMCI on October 21, 2024 and sell it today you would earn a total of 56.00 from holding ETC on CMCI or generate 2.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. ETC on CMCI
Performance |
| Timeline |
Dow Jones and ETC On Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
ETC on CMCI
Pair trading matchups for ETC On
Pair Trading with Dow Jones and ETC On
The main advantage of trading using opposite Dow Jones and ETC On positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, ETC On 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 ETC On will offset losses from the drop in ETC On's long position.| Dow Jones vs. SkyWest | Dow Jones vs. Air Transport Services | Dow Jones vs. LATAM Airlines Group | Dow Jones vs. Emerson Radio |
| ETC On vs. Scottish Mortgage Investment | ETC On vs. VinaCapital Vietnam Opportunity | ETC On vs. Edinburgh Worldwide Investment | ETC On vs. Baillie Gifford Growth |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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